March 12, 2015

Sued in Circuit Court? Summary Judgment Is The Danger To You

Many Alabama consumers are sued by debt collectors in Circuit Court and the biggest danger they face is the collector's "Motion for Summary Judgment."

Well, actually this is true after they avoid a default judgment. That's the biggest danger -- simply not responding to the lawsuit at all. But once you respond to a collection lawsuit in circuit court your biggest danger is receiving a motion for summary judgment.

Let's talk about:

1. What is a motion for summary judgment?
2. What is the danger?
3. How do you fight back against the summary judgment motion?

1. What is a motion for summary judgment?

This is where the debt collector (Asset Acceptance, LVNV Funding, Midland Funding, Portfolio Recovery, Unifund, etc) asks the court to enter judgment against you.

You see, a "motion" is simply a request of a judge. We normally don't do these verbally -- instead we file these in writing.

So a motion is a written request.

Well, what is a "summary judgment?" It is where the court is told by the debt buyer that there is no way any reasonable judge or jury could find in your favor. So the judge should "summarily" enter judgment.

The debt collector will say that there is no dispute that you owe the debt. So the judge should go ahead and rule against you.

So what is the big deal about this?

2. What is the danger?

If the judge rules against you, then you will not have a trial.

You won't have your day in court.

It is over.

The debt collector has won.

This is why the motion for summary judgment is so dangerous -- if you lose, then your entire case is lost.

"But that's not fair -- I want my day in court!"

It doesn't matter.

If you lose the motion for summary judgment, then the collector will have all of the powers that come with a judgment. The collector can garnish your wages -- up to 25%.

Garnish your bank accounts -- that is to drain every dollar in your bank account.

Even though you are confident that you could win your case at trial -- there is no trial.

So, should you take a motion for summary judgment seriously?


This can make or break your case.

3. How do you fight back against the summary judgment motion?

First, don't ignore it. Take it very seriously.

Second, you have to follow the rules. If you have an experienced lawyer representing you then he or she will know what to do. If you are representing yourself, then you have to learn the rules around summary judgment.

It does no good to complain about it is unfair you have to learn the rules -- if you are acting as your own lawyer then the judge will expect you to be your own lawyer and follow the rules of civil procedure.

Third, keep in mind the critical factor of the debt buyer must prove it owns the debt. Carefully examine the evidence to see if the debt collector has proved -- not suggested but proved with valid evidence -- that it owns the debt.

Normally this is done with affidavits -- sworn statements by someone.

Fourth, when considering affidavits, any documents referred to must normally be attached to the affidavit. So if the affidavit says "We bought this debt" then the purchase agreement must be attached. Not a partial copy but the whole thing.

Fifth, if you are sued for breach of contract, is the contract or the "terms and conditions" of the credit card attached? Is it the right date? The right version in force during the time you had the credit card?

Sixth, is there "hearsay" which is any statement offered to prove the truth of the matter asserted that has occurred outside of court.

Seventh, does the person offering the affidavit have personal knowledge of what they are testifying to? Here's an example from a trial my partner Stan Herring tried with Portfolio Recovery Associates. While this was a trial, you'll see the relevance.

Witness: I know how Chase keeps its records -- they keep accurate records.

Stan: What's the basis of you saying you know Chase keeps accurate records? [Stan asked the question in this manner because he knew the witness would either admit the truth or look foolish in lying].

Witness: Well, I have a Chase card and it seems accurate to me.

The judge just shook his head. Not much to say to that silly answer.

So in an affidavit if the witness from Midland Funding claims to know how Citibank keeps its records, the question is "How does he or she know this?"

Eighth, move to strike anything that is improper or violates the rules of evidence.

Finally, if there is opposing evidence you can offer, make sure you offer it on time and in the right manner and form.

You can beat summary judgment motions. We routinely have the other side voluntarily withdraw their motion. We have had judges chastise lawyers for filing such poor quality motions.

Why does low quality work get filed?

Because the collectors assume that you, as a non lawyer, will not know the time and manner to oppose the summary judgment motion and therefore you will lose.

Now you have some knowledge -- make sure you complete your knowledge so you know all of the rules of civil procedure and the rules of evidence OR hire a lawyer who does so that you can fight back against the motion for summary judgment.

We wish you the best and if we can help you then call us in you have a case in Alabama (and don't have a lawyer representing you) at 205-879-2447 or you can contact us through our website Alabama Consumer. You can also read more about collection suits on our website.

Let us know if we can help you and best wishes!

John Watts

December 2, 2014

TCPA Decision: No need to "stay" case while waiting on FCC to rule on who is a "called party"

On November 3, 2014, one of our newer judges -- Judge John H. England, III, in the Northern District of Alabama, issued a very well reasoned decision explaining why a lawsuit against Wells Fargo does not need to be "stayed" or "frozen" while the FCC considers how to interpret the Telephone Consumer Protection Act (TCPA).

The Plaintiff sued Wells Fargo claiming that Wells Fargo had auto dialed his cell phone. Wells did not dispute this but claims it was trying to reach someone else who used to have the cell phone number and gave permission for Wells to call it.

As an aside, this has been an area we have argued with defendants on for years. They tend to think once they had permission, they can call that number for all eternity. See if that works if you get permission to walk in someone's house and then years later the house is sold. I don't think that former permission of the former homeowner does you much good when you stroll in the new owner's house!

Anyway, back to this case -- here is the argument by Wells:

Wells Fargo now seeks to stay this action based on the doctrine of primary jurisdiction pending the resolution of two petitions recently submitted to the FCC for consideration. (Doc. 17). The first petition was filed by United Healthcare Services, Inc. on January 16, 2014 ("UHS Petition") and asks the FCC to clarify the applicability of the TCPA as to calls "to wireless numbers for which valid prior express consent has been obtained but which, unbeknownst to the calling party, have subsequently been reassigned from one wireless subscriber to another." (Doc. 17-1 at 1). The second petition, brought by ACA International, seeks formal rulemaking by the FCC ("ACA Petition"). (Doc. 17-2). The ACA requests the FCC, among other things, establish a "safe harbor for non-telemarketing calls when the debt collector had previously obtained appropriate consent and had no intent to call any person other than the person who had previously provided consent to be called." (Doc. 17-2 at 15).

Judge England analyzes as follows:

The primary jurisdiction doctrine is concerned with protecting the administrative process from judicial interference. See Boyes v. Shell Oil Prods. Co., 199 F.3d 1260, 1265 (11th Cir. 2000) (citing United States v. W. Pac. R.R. Co., 352 U.S. 59, 63 (1956)). Primary jurisdiction "is a doctrine specifically applicable to claims properly cognizable in court that contain some issue within the special competence of an administrative agency. It requires the court to enable a `referral' to the agency, staying further proceedings so as to give the parties reasonable opportunity to seek an administrative ruling." Reiter v. Cooper, 507 U.S. 258, 268 (1993). "[T]he main justifications for the rule of primary jurisdiction are the expertise of the agency deferred to and the need for a uniform interpretation of a statute or regulation." Boyes, 199 F.3d at 1265 (quoting Cnty. of Suffolk v. Long Island Lighting Co., 907 F.2d 1295, 1310 (2d Cir. 1990)); see also W. Pac. R.R. Co., 352 U.S. at 64 (internal quotation marks omitted). Primary jurisdiction "is a discretionary tool, [it is] a flexible concept to integrate the regulatory functions of agencies into the judicial decision making process by having agencies pass in the first instance on technical questions of fact uniquely within the agency's expertise and experience, or in cases where referral is necessary to secure uniformity and consistency in the regulation of business, such as issues requiring the exercise of administrative discretion." Columbia Gas Transmission Corp. v. Allied Chemical Corp., 652 F.2d 502, 520 n.14 (5th Cir. 1981) (citations omitted).[2]

So, what should be done in this situation?

The primary factors a court considers when determining whether to stay an action based on primary jurisdiction grounds are (1) whether the specialized knowledge of the FCC is needed to answer the questions before the court and (2) whether referral is necessary for a uniform interpretation of the statute at issue. W. Pac. R.R. Co., 352 U.S. at 64. As to the first factor, the issues raised by the UHS and ACA Petitions do not implicate the FCC's specialized expertise or fact-finding abilities. The "called party" issue is purely a matter of statutory construction (of a non-technical term), which courts are well-equipped to undertake, not a matter requiring administrative expertise. It is not a technical question or factual inquiry uniquely within the agency's expertise. See e.g., Loggerhead Turtle v. County Council of Volusia Cnty., Fla., 148 F.3d 1231, 1259-60 (11th Cir. 1998) (discussing, in dicta, the question of whether artificial beachfront lighting "takes" sea turtles as being within the special competence of the U.S. Fish and Wildlife Service); Columbia Gas Transmission Corp., 652 F.2d at 520 n.14 (explaining the court's determination regarding enforcement of a payback obligation for diversions prior to a certain date would be materially facilitated by FERC's informed evaluation of a Representative's enforcement caution and how the facts of the case fit within that caution).

The meaning of "called party" is pretty simple -- who owned the phone number or used the phone that you made ring? Not sure why this is so "complicated" for defendants. Especially here in the Eleventh Circuit (Alabama, Florida and Georgia) as we have a decision on this:

The Eleventh Circuit answered this question in Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242, 1251-52 (11th Cir. 2014), rejecting the argument the "intended recipient" is the "called party" for purpose of § 227 and explaining a "called party" means "the subscriber to the cell phone service." Breslow v. Wells Fargo Bank, N.A., ___ F.3d ___, 2014 WL 2565984, *1 (11th Cir. June 9, 2014) (quoting id.). Likewise, while Wells Fargo submits the ACA Petition "asks the FCC to . . . establish a `safe harbor for non-telemarketing calls when the debt collector had previously obtained appropriate consent and had no intent to call any person other than the person who had previously provided consent to be called,'" (doc. 17-2 at 2), the Eleventh Circuit foreclosed such a defense in Osorio. 746 F.3d at 1242, 1253.

Therefore, the following is the death blow to the "stay" argument:

As to the second factor, the Eleventh Circuit has spoken directly to this issue,[3] providing direct guidance for a uniform interpretation of the statute throughout the Circuit. Wells Fargo has not provided, and the undersigned has not found, any other circuit court that has interpreted "called party" differently or that has created an exception to the rule. It appears the only other circuit court to have addressed the issue follows the same interpretation as the Eleventh Circuit. See Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637, 640 (7th Cir. 2012). Furthermore, the interpretation of the statutory term "called party" is not an issue requiring the exercise of administrative discretion. See Columbia Gas Transmission Corp., 652 F.2d at 520 n.14 (explaining referral is necessary to secure uniformity and consistency in the regulation of business when the issue requires the exercise of administration discretion).

So we have two appellate courts that have ruled on this and say the one who has the number now is the called party. Wells Fargo called the Plaintiff's cell phone without permission. Pretty straightforward.

We'll see what the FCC does and whether it matters and this is the point made by the court:

Wells Fargo contends the FCC is "likely to rule on the petitions shortly" because it expects "concrete movement on both [petitions] . . . within the next six months," (doc. 27 at 1 (citing doc. 20 at ¶ 11)). Although Wells Fargo expects the FCC to "move on the petition," there is no indication the FCC will make any kind of ruling in the near future or at all. If the FCC does issue a ruling providing a different interpretation of "called party" or creating an exception applicable to this case, the court will address whether that ruling has retroactive application and what level of deference is due. See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 476 U.S. 837 (1984) (discussing the appropriate level of deference); Heimmermann v. First Union Mort. Corp., 305 F.3d 1257, 1260 (11th Cir. 2002) (discussing when retroactivity applies to agency interpretation and rules).

Bottom line is in the Eleventh (and Seventh) Circuits at a minimum this issue has been resolved in favor of the consumer by applying the plain language of the rule -- you make a telephone ring with an autodialer then make sure you have permission from the owner of that phone.

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.

November 29, 2014

TCPA Decision: Does offer of judgment "moot" Plaintiff's claims?

Ever get those annoying political calls to your cell phone? Not a human but robo (computer) dialed calls? Lori Shamblin did and decided to sue multiple defendants for doing this in federal court in Tampa, Florida.

Here's what one defendant did to try to show the court that the case should be dismissed as Plaintiff allegedly got everything she was entitled to receive:

New Partners Consulting, Inc. seeks dismissal of the Second Amended Complaint under Rule 12(b)(1) alleging that its Rule 68 Offer of Judgment to Shamblin was an offer of complete relief and thus no case or controversy remains between the parties. (Doc. #122 at 3).

Here's the basis of this argument:

The doctrine of mootness springs directly from the case or controversy limitation because an action that is moot cannot be characterized as an active case or controversy. Id. Mootness can occur due to a change in circumstances or a change in the law. Coral Springs St. Sys., Inc. v. City of Sunrise, 371 F.3d 1320, 1328 (11th Cir. 2004). A case is also moot when the issue presented is no longer live, the parties lack a legally cognizable interest in the outcome, or a decision could no longer provide meaningful relief to the parties. Troiano v. Supervisor of Elections in Palm Beach Cnty., Fla., 382 F.3d 1276, 1282 (11th Cir. 2004).

The details of the defendant's argument are the following:

Regardless of whether the plaintiff accepts the offer, "an offer of judgment providing the plaintiff with the maximum allowable relief [will] moot the plaintiff's claim." Moore v. Hecker, 250 F.R.D. 682, 684 (S.D. Fla. 2008). Therefore, "Rule 68 offers can be used to show that the court lacks subject-matter jurisdiction." Pollack v. Bay Area Credit Serv., LLC, No. 08-61101-Civ, 2009 WL 2475167, at *5 (S.D. Fla. Aug. 13, 2009). "Once the defendant offers to satisfy the plaintiff's entire demand, there is no dispute over which to litigate .. . and a plaintiff who refuses to acknowledge this loses outright, under Fed. R. Civ. P. 12(b)(1), because he has no remaining stake." Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir. 1991).

So did the defendant provide all the relief Plaintiff sought?

Here, unlike Delgado, New Partners Consulting, Inc.'s Offer of Judgment did not comport with the standard set forth in Rule 68 allowing Shamblin to recover the "maximum relief available under the law." Id. There are multiple defendants in this action, whereas in Delgado, there was only one. Shamblin's maximum recovery includes relief from all Defendants and not solely from New Partners Consulting, Inc. Therefore, the Offer of Judgment, which was not a mirror image of the prayer for relief, did not moot Shamblin's claim and deprive this Court of jurisdiction.

In the Complaint Shamblin seeks the following relief:

a. Certify this action as a class action under Federal Rule of Civil Procedure 23, appointing Plaintiff as the class representative and her counsel as class counsel;
b. Enjoin Defendants from violating the TCPA in the future by placing auto-dialed or pre-recorded calls to cellular telephone numbers;
c. Award statutory damages to Plaintiff and the class pursuant to 47 U.S.C. § 227(b)(3).
d. Award reasonable attorney fees and costs to compensate Plaintiff's counsel for the time and litigation expenses incurred on behalf of the class; and
e. Issue such other relief as the Court deems equitable and just.
(Doc. #131 at 5).

New Partners Consulting, Inc.'s Offer of Judgment, offered Shamblin the following:

(1) Judgment shall be entered against Defendant and in favor of SHAMBLIN in the amount of $7,500.00, arising from Plaintiff's TCPA claims against the Defendant as alleged in Plaintiff's Second Amended Class Action Complaint, (2) Judgment shall include an additional amount for taxable costs incurred by Plaintiff in prosecuting the case, in an amount to be determined by the Court if the parties are unable to come to an agreement, (3) Judgment shall enjoin Defendant from violating the TCPA in the future by placing auto-dialed or prerecorded calls to SHAMBLIN's cellular telephone number(s), and (4) Should Plaintiff accept this Offer, Plaintiff agrees that acceptance of this Offer resolves Plaintiff's TCPA claims against Defendant.
(Doc. #122-1).

An Offer of Judgment cannot be evaluated solely by its dollar amount. Lynch v. First Nat. Collection Bureau, Inc., No. 11-60798-CIV, 2011 WL 2457903 (S.D. Fla. 2011). In the instant action, Shamblin seeks to enjoin all Defendants[1] from committing future violations of the TCPA. (Doc. #131 at 5). The TCPA provides in relevant part that,

A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State—
(A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation,
(B) an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or
(C) both such actions.
If the court finds that the defendant willfully or knowingly violated this subsection or the regulations prescribed under this subsection, the court may, in its discretion, increase the amount of the award to an amount equal to not more than 3 times the amount available under subparagraph (B) of this paragraph.
47 U.S.C. § 227(b)(3)(emphasis added).

Accordingly, as the TCPA provides that an injunction is an appropriate remedy sought under the statute, and because Shamblin did in fact seek to enjoin all the Defendants in this action, an Offer of Judgment without full injunctive relief diminishes the value of the judgment Shamblin seeks. Thus, the Offer of Judgment, which included injunctive relief only against New Partners Consulting, Inc., even if for the full monetary amount, does not encompass the entire value of relief Shamblin seeks because it does not include an injunction against the other Defendants in this action. Lynch, 2011 WL 2457903.

Although Defendants, Obama for America and DNC Services Corporation, are willing to be enjoined from "violating the TCPA in the future by placing auto-dialed or pre-recorded calls to cellular telephone numbers" at this juncture, that offer does not appear on the face of New Partners Consulting, Inc.'s Offer of Judgment. (Doc. #136). This Court finds that New Partners Consulting, Inc.'s Offer of Judgment failed to provide "maximum allowable relief" to Shamblin and therefore did not moot Shamblin's claim and deprive this Court of subject matter jurisdiction.

So what is the take home message?

For defendants, if you are going to use an offer of judgment to try to "moot" a Plaintiff's claims, you have to provide the full relief requested. This is not a buffet where you can pick and choose which items you want and those you don't want.

For Plaintiffs, make sure you are asking for all the relief you can receive and carefully evaluate offers of judgment to see how the compare with what you asked for. Additionally, I find that hardly any defendants understand the law (or if they do they don't follow the law) on what makes a valid offer of judgment. They will do things such as:

*Ask that the claims be dismissed -- uh, no, it is a judgment!
*Demand that the Plaintiff sign a settlement release -- nope -- we don't sign releases when we have a judgment against you.
*Limit attorney fees to 14 days after serving the offer of judgment -- nope -- when we get a judgment we can get fees when you make us fight on fees.

The list goes on and on.

If it is not a valid offer of judgment, it cannot "moot" your case.

Hope you enjoyed this discussion of this case and have a great day!

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.

November 28, 2014

TCPA Decision: Not responding to a motion for summary judgment

There is an odd decision -- or I should say the Plaintiff acted oddly -- and the result was the defendants (LVNV Funding, Northland Group, and Citibank) were dismissed from the case.

You can read this decision of Schweitzer v. Northland Group, LVNV Funding and Citibank which was released by the Southern District of Florida court on November 6, 2014.

Here are the basic facts:

Schweitzer alleges that Defendants have sought to collect on his credit-card debt since around November 11, 2011. DE 7 (Amended Complaint) ¶ 12. Schweitzer contends that Defendants' communications during their collection efforts have been harassing, inaccurate, and otherwise wrongful. On this basis, Schweitzer asserts the following claims: (1) violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq., against Northland; (2) violation of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, against all Defendants; and (3) violation of the Florida Consumer Collection Practice Act ("FCCPA"), Fla. Stat. § 559.55, et seq., against all Defendants. Am. Compl. ¶¶ 30-46. Defendants have now moved for summary judgment on Schweitzer's claims against them. See DE 40-42.

Pretty standard stuff. Credit card debt is often sold and a company like LVNV will claim to buy the debt. LVNV normally doesn't collect directly but instead outsources the collection to a debt collector such as Northland. Collection is much more efficient if an auto-dialer (computer dialer) is used rather than a human being dialing the numbers.

But here is where the conduct of the Plaintiff gets odd:

The Court begins by noting that Schweitzer has failed to file a timely response to Defendants' Motions. Defendants filed the Motions on September 2, 2014. See DE 40-42. Any opposition to the Motions was due by September 19, 2014. See S.D. Fla. L.R. 7.1(c). However, Schweitzer did not respond by that deadline. Instead, on September 26, 2014, he requested additional time to file his opposition papers. DE 57-59.

The Court granted Schweitzer's request for an extension of time, and allowed him until October 3, 2014, to respond. DE 60. However, October 3 came and went, and Schweitzer still had not filed any response. On October 7, 2014, the Court directed Schweitzer to file his opposition papers no later than October 10, 2014. DE 61. The Court also informed Schweitzer that if he continued to disregard the Court's deadlines, the Court would not consider his subsequent filings in resolving the Motions. Id. at 1. But Schweitzer again failed to file a timely response. See DE 63-65. Because Schweitzer's papers in opposition to the Motions were untimely, despite substantial accommodations by the Court, the Court will not consider those materials in resolving the Motions.

What to say? You have to show up to the game if you want to play. If you file a lawsuit, you have to follow the deadlines. The federal judge seems to have been very accommodating to changing the deadlines, extending the deadlines, etc. but at some point the patience is exhausted.

Turning to the substance, the court points out that in a Fair Debt Collection Practices Act (FDCPA) case, the Plaintiff must prove the debt is a consumer debt:

To prevail on a FDCPA claim, a plaintiff must prove that: (1) he has been the target of collection activity arising from consumer debt; (2) the defendant is a debt collector as defined under the FDCPA; and (3) the defendant has engaged in an act or omission prohibited by the FDCPA. Battle v. Gladstone Law Group, P.A., 951 F. Supp. 2d 1310, 1313 (S.D. Fla. 2013); see also 15 U.S.C. §§ 1692a(5), 1692d, 1692e.

A consumer debt is "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes." 15 U.S.C. § 1692a(5); see also Abby v. Paige, 903 F. Supp. 2d 1330, 1334 (S.D. Fla. 2012). Northland argues that Schweitzer has provided no evidence that the debt at issue was a consumer debt, or in other words that the debt was incurred in connection with personal, family, or household purposes. DE 42-1 at 12; DE 42-2 ¶ 9; see also DE 40-2 ¶ 7. Schweitzer has conceded this point both by failing to timely or properly respond to Northland's Statement of Material Facts, and also by failing to timely respond to Northland's Requests for Admissions, which included a request to admit that Schweitzer had no evidence that the debt was a consumer debt. DE 42-4 at 4; see also Fed. R. Civ. P. 36(a)(3) ("A matter is admitted unless, within 30 days after being served, the party ... serves ... a written answer or objection. ..."). Because the FDCPA requires that a plaintiff prove that he was the target of collection activity arising from a consumer debt (see 15 U.S.C. § 1692a(5)), and Schweitzer has failed to provide any record evidence whatsoever that Northland called him in connection with a consumer debt, Northland is entitled to summary judgment on Schweitzer's FDCPA claim against it. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115-16 (11th Cir. 1993).

Turning to the auto dialed calls (TCPA), the court said Plaintiff gave permission to Citibank (the original creditor) and the debt collection calls to the Plaintiff's residential line are not covered by the residential line portion of the TCPA. I think the Plaintiff argues this but failed to do so in time so the court held all of this was admitted.

Schweitzer provided his telephone number to Citibank when he applied for a credit card. DE 40-2 ¶¶ 2-4. Schweitzer thus consented to receive calls from Citibank about the resulting credit-card debt. See 2008 FCC Ruling, 23 F.C.C.R. at 564. Because Schweitzer consented to receive these calls from Citibank, his TCPA claim based upon the alleged debt-collection calls fails as to Citibank as a matter of law. See 47 U.S.C. § 227(b)(1)(B).

Schweitzer's TCPA claim also fails with respect to all Defendants because their debt-collection calls do not fall within the scope of the TCPA's prohibitions. Section 227(b)(1)(B) prohibits certain calls to residential telephone lines. However, some types of calls are excluded from the coverage of Section 227(b)(1)(B) by FCC rules or orders. See id. § 227(b)(2)(B). Among those excluded calls are debt-collection calls. 47 C.F.R. § 64.1200(a)(3)(iii); Meadows v. Franklin Collection Serv., Inc., 414 F. App'x 230, 235 (11th Cir. 2011) (per curiam). Because the telephone calls at issue in this case were debt-collection calls placed to Schweitzer's residential telephone number,[1] they are excluded from the scope of the TCPA by the FCC, and cannot support a TCPA claim.

The biggest take home lesson from this is you must respond to deadlines in federal court or you lose.

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.

November 23, 2014

TCPA Decision: What is the Purpose of Damages Per Call/Text/Fax?

Often defendants who are sued under the TCPA (Telephone Consumer Protection Act) argue that the damages are unfair and they represent a "windfall" to the plaintiff who "wasn't really hurt."

While it has no basis in law, the emotional and financial reasons for making this argument are plain. A defendant can face $1500 per call -- per text -- per fax. At a minimum it is $500 per call/fax/text.

We have had cases involving hundreds of calls -- the damages can add up to a very high amount (high six figures) so the defendants make any argument possible to try to get judges to throw these cases out.

The Eleventh Circuit, on October 30, 2014, issued a very important decision that guts this argument. The case is Palm Beach Golf v. Sarris.

We'll keep the discussion focused on the interesting way the Eleventh Circuit dismisses this argument but a few facts are necessary first.

On December 13, 2005, Plaintiff Palm Beach Golf Center-Boca, Inc. received an unsolicited one-page fax advertisement, promoting dental services provided by Defendant John G. Sarris, D.D.S., P.A., a Florida dental practice.


Among these was the December 13, 2005 transmission to Plaintiff Palm Beach Golf, a golf equipment store. Despite its successful transmission to Plaintiff, no employee of Palm Beach Golf could recall actually seeing or printing the fax advertisement. Rather, the evidence that the advertisement was transmitted by B2B, and received by Palm Beach Golf, is the Expert Report, which confirms the successful fax transmission, taking one minute of connection time, made to Plaintiff's fax machine.

So the fax was made but the Plaintiff didn't even know it. The equivalent is a text message (considered a "call" under the TCPA) was sent but you did not see it. Or a call was made that you missed.

Notice the argument by the violator of the law that the district court accepted:

Despite reaching the merits of Palm Beach Golf's TCPA claim, the District Court further held that Palm Beach Golf lacked Article III standing, because it was unable to demonstrate that it had suffered an injury in fact. The District Court concluded that "nowhere in the statute does Congress express an intent to circumvent the requirement that a plaintiff have Article III case-or-controversy standing to bring a claim, which requires that the plaintiff demonstrate a distinct and palpable injury to himself." Because there was no evidence that any employee of Plaintiff's saw or printed the transmitted fax, the District Court concluded that Palm Beach Golf was unable to demonstrate that it had suffered a sufficiently concrete injury to establish standing under Article III.

Standing is the idea that you must have an actual injury before you go into a federal court and seek damages or other relief.

Palm Beach Golf insists that it was error for the District Court to hold that, because it failed to prove that the fax was printed or seen, it lacked Article III standing. For Plaintiff, the specific injury targeted by the TCPA is the sending of the fax and resulting occupation of the recipient's telephone line and fax machine, not that the fax was actually printed or read. We agree.

"Article III of the Constitution confines the reach of federal jurisdiction to `Cases' and `Controversies.'" Alabama-Tombigbee Rivers Coal. v. Norton, 338 F.3d 1244, 1252 (11th Cir. 2003) (quoting U.S. CONST. art. III, § 2). In order "[t]o establish Article III standing, an injury must be `concrete, particularized, and actual or imminent; fairly traceable to the challenged action; and redressable by a favorable ruling.'" Clapper v. Amnesty Int'l USA, 133 S. Ct. 1138, 1147 (2013) (quoting Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 149, 130 S. Ct. 2743, 2752 (2010)). Although Congress may not convert a generalized grievance "into an `individual right' vindicable in the courts," Lujan v. Defenders of Wildlife, 504 U.S. 555, 576-77, 112 S. Ct. 2130, 2144-45 (1992), "Congress may create a statutory right or entitlement[,] the alleged deprivation of which can confer standing to sue even where the plaintiff would have suffered no judicially cognizable injury in the absence of statute." Warth v. Seldin, 422 U.S. 490, 514, 95 S. Ct. 2197, 2213 (1975) (citing Linda R. S. v. Richard D., 410 U.S. 614, 617 n.3, 93 S. Ct. 1146, 1148 n.3 (1973)). In other words, "[t]he actual or threatened injury required by Art[icle] III may exist solely by virtue of `statutes creating legal rights, the invasion of which creates standing.'" Id. at 500, 95 S. Ct. at 2206 (citation omitted) (quoting Linda R. S., 410 U.S. at 617 n.3, 93 S. Ct. at 1148 n.3).

The question now is whether the TCPA is one of these statutes that the violation of it creates the right to sue, even if there are no "real damages."

The TCPA, in this instance, creates such a cognizable right. It is clear from the legislative history of the statute that the TCPA's prohibition of unsolicited fax advertisements was intended to protect citizens from the loss of the use of their fax machine during the transmission of the fax data. See H.R. REP. NO. 102-317, at 10 (1991) ("FACSIMILE ADVERTISING[:] . . . This type of telemarketing is problematic for two reasons. First, it shifts some of the costs of advertising from the sender to the recipient. Second, it occupies the recipient's facsimile machine so that it is unavailable for legitimate business messages while processing and printing the junk fax." (emphasis added)).

Further, Congress created a private right of action for enforcement of violations of the statute in section 227(b)(3) and provided statutory damages[4] for a "junk" fax recipient. TCPA, 47 U.S.C. § 227(b)(3) (2006). Notably, a prevailing plaintiff need not have suffered any monetary loss in order to recover statutory damages. Chapman v. Wagener Equities, Inc., 747 F.3d 489, 491 (7th Cir. 2014) ("[N]o monetary loss need be shown to entitle the junk-fax recipient to statutory damages.").

The court goes on to discuss this issue in the context of a "bounty hunter":

Second, Palm Beach Golf possesses standing because the TCPA functions as a congressionally created "bounty," permitting private individuals to sue based on a statutory violation. See Chapman, 747 F.3d at 491. In the ordinary case, mere statutory authorization of a citizen suit alone is not sufficient to create standing under Article III. See Lujan, 504 U.S. at 571-74, 112 S. Ct. at 2142-43. The Supreme Court, however, has carved out an exception to this rule for instances where Congress has created a statutory scheme by which it assigns an injury, inflicted upon the federal government, to private citizens. Specifically, Congress can assign an injury to the government's sovereignty to private citizens for purposes of bringing suit. Where this has occurred, these private citizens possess Article III standing. See Vt. Agency, 529 U.S. at 774, 120 S. Ct. at 1863 ("[T]he United States' injury in fact suffices to confer standing on respondent."). Put another way, where a federal statute prohibits conduct, Congress may expressly permit individual citizens to bring suit against those who engage in the prohibited conduct. Such laws are not unlike qui tam statutes,[5] which have been expressly recognized by the Supreme Court as sufficient for Article III standing purposes. See Alea London Ltd. v. Am. Home Servs., Inc., 638 F.3d 768, 778-79 (11th Cir. 2011) (citing Cook Cnty., Ill. v. United States ex rel. Chandler, 538 U.S. 119, 131, 123 S. Ct. 1239, 1247 (2003)).

The TCPA provides standing under this theory because it is a "bounty" statute, specifically providing a prevailing plaintiff $500 in statutory damages for each unlawful fax sent, as well as treble damages under certain circumstances for intentional violations of the statute. Chapman, 747 F.3d at 491 ("Nor does entitlement to statutory damages [under the TCPA] require any showing of injury of any sort, for such damages not only serve to compensate for injuries difficult to estimate in dollar terms, but also, like statutory compensation for whistleblowers, operate as bounties, increasing the incentives for private enforcement of law."); Schlueter v. Latek, 683 F.3d 350, 356 (7th Cir. 2012) ("There are plenty of bounty-hunter statutes, see, e.g., . . . 47 U.S.C. § 227(b)(3) (Telephone Consumer Protection Act) (unsolicited text messages or fax advertisements)."); Critchfield Physical Therapy v. Taranto Grp., Inc., 293 Kan. 285, 298, 263 P.3d 767, 778-79 (2011) (relying on the U.S. Court of Appeals for the Seventh Circuit's holding that the TCPA's statutory damages scheme operates as a bounty). Through the TCPA, Congress intended to curb specific conduct, expressly prohibiting, among other things, the "use of any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement," conduct alleged here of Defendant. TCPA, 47 U.S.C. § 227(b)(1)(C) (2006).[6] Thus, under this theory, Palm Beach Golf has Article III standing as a result of Congress's assignment to Plaintiff of the United States' injury resulting from Sarris, D.D.S.'s alleged violation of the TCPA's fax ban.

This, at least in the Eleventh Circuit (Alabama, Georgia, Florida) does away with the argument that it is unfair or improper for a plaintiff to get damages of $500-$1500 per call when, as the defendants like to say, "the plaintiff wasn't even hurt!"

Doesn't matter.

The TCPA is a bounty hunter statute and the whole purpose is to encourage consumers to file suit to enforce this law. Think of the old west movies where the bounty hunter is paid to bring in the criminal. No crime was committed against the bounty hunter but the government has an interest in the wrongdoer captured. Same here.

Stop the illegal calls/texts/faxes by incentivizing consumers to sue. The damages paid will incentivize businesses to stop violating the law.

(There is discussion of vicarious liability that you can read but the focus of this blog post is on the bounty hunter nature of the statute.)

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.

November 21, 2014

TCPA Decision: Wife Gave Cell Phone Number To ER -- Consent For Calls?

A big issue in the TCPA is whether consent, and the proper type of consent, was given that would allow a company to auto dial a consumer's cell phone without being subject to damages of $500-1500 per call.

Helping us as lawyers fill in the picture is a recent decision from the Eleventh Circuit on September 29, 2014, in Mais v. Gulf Coas Collection Bureau.

As usual, we will include the relevant parts from the decision with our analysis below it.

Plaintiff Mark Mais filed a claim in federal district court against a hospital-based radiology provider and its debt collection agent for making autodialed or prerecorded calls in violation of the Telephone Consumer Protection Act of 1991 (TCPA), Pub. L. No. 102-243, 105 Stat. 2394 (codified at 47 U.S.C. § 227). Defendant Gulf Coast Collection Bureau, Inc. ("Gulf Coast") argued that the calls fell within a statutory exception for "prior express consent," as interpreted in a 2008 declaratory ruling from the Federal Communications Commission (the "FCC" or "Commission"). See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 (2008 FCC Ruling), 23 FCC Rcd. 559, 564. The district court granted Mais partial summary judgment against Gulf Coast for alternative reasons: the FCC's interpretation was inconsistent with the language of the TCPA and, regardless, the 2008 FCC Ruling did not apply on the facts of this case.

Nothing particularly noteworthy except the district court judge threw out the FCC interpretation and ruling. This was surprising when the decision came out.

I think the Eleventh Circuit was surprised also....

As we see it, the district court lacked the power to consider in any way the validity of the 2008 FCC Ruling and also erred in concluding that the FCC's interpretation did not control the disposition of the case. In the Hobbs Act, 28 U.S.C. § 2342, Congress unambiguously deprived the federal district courts of jurisdiction to invalidate FCC orders by giving exclusive power of review to the courts of appeals. See Self v. Bellsouth Mobility, Inc., 700 F.3d 453, 461 (11th Cir. 2012). And Mais's claim falls squarely within the scope of the FCC order, which covers medical debts. The 2008 FCC Ruling "conclude[d] that the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent to be contacted at that number regarding the debt." 23 FCC Rcd. at 564. There is no dispute that Mais's wife listed his cell phone number on a hospital admissions form and agreed to the hospital's privacy practices, which allowed the hospital to release his health information for billing to the creditor. As a result, the TCPA exception for prior express consent — as interpreted in the 2008 FCC Ruling — entitles Gulf Coast to judgment as a matter of law. Accordingly, we reverse the district court's grant of partial summary judgment to Mais and remand with instructions to enter final summary judgment for Gulf Coast.

This is a nice summary of what the court held -- some of the details of this lengthy opinion will come below.

Before the district court considered the question of class certification, the Defendants moved for summary judgment on the affirmative defense that the calls could not and did not violate the TCPA because Mais provided "prior express consent" to receive them when his wife completed in writing the Hospital admissions forms. See 47 U.S.C. § 227(b)(1)(A)(iii). The Defendants relied on a 2008 FCC Ruling, which concluded that "the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt." 23 FCC Rcd. at 564. Defendants further argued that, because the Hospital had consent to use and disclose Mais's cell phone number under the Health Insurance Portability and Accountability Act (HIPAA), Pub. L. No. 104-191, 110 Stat. 1936 (1996), the TCPA prior express consent exception was satisfied. Florida United and Sheridan also separately argued that they could not be held vicariously liable for Gulf Coast's calls because § 227(b)(1)(A) of the TCPA only reaches those who "make any call" to a cell phone using automatic dialing or a recorded voice. Mais likewise moved for partial summary judgment, arguing that he had not given prior express consent for the calls because the 2008 FCC Ruling did not apply to medical debt and because his cell phone number had been given to the Hospital, not the creditor, Florida United.

All I can say it is creative to argue medical debt is not subject to the 2008 FCC Ruling.

The district court found that Mais, not the Defendants, was entitled to summary judgment on the prior express consent defense mounted by Gulf Coast, Florida United, and Sheridan. The court began by explaining that satisfaction of HIPAA did not automatically ensure compliance with the TCPA, "a separate statute that imposes separate requirements." Mais, 944 F. Supp. 2d at 1234. The district court also determined that Defendants could not prevail on the basis of the 2008 FCC Ruling. While acknowledging that the Hobbs Act gave the federal courts of appeals exclusive jurisdiction to review final FCC orders, the district court determined that it had jurisdiction to examine the FCC's interpretation of the TCPA because the central purpose of Mais's suit was to obtain damages for violations of the statute, not to collaterally attack or invalidate the 2008 FCC Ruling. The court concluded that the Federal Communication Commission's interpretation of "prior express consent" embodied in its 2008 rule was not entitled to any deference because it conflicted with the clear meaning of the TCPA. See Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 n.9 (1984) ("The judiciary is the final authority on issues of statutory construction and must reject administrative constructions which are contrary to clear congressional intent."). According to the district court, implying consent from the provision of a cell phone number to a creditor impermissibly expanded the statutory exception to cover "prior express or implied consent." Mais, 944 F. Supp. 2d at 1239. Compare Black's Law Dictionary 346 (9th ed. 2004) (defining "express consent" as "[c]onsent that is clearly and unmistakably stated"), with id. (defining "implied consent" as "[c]onsent inferred from one's conduct rather than from one's direct expression"). Cut loose from any FCC rulemaking concerning the meaning of prior express consent, and thus interpreting the language found in the Act afresh, the district court concluded that listing Mais's cell phone number on the Hospital admissions documents alone did not evince prior express consent to receive autodialed or prerecorded calls. In the alternative, the district court also ruled that, even if the FCC's interpretation of the meaning of prior express consent found in the 2008 FCC Ruling was valid and binding, the rule would not apply under the facts of this case because it was designed to cover consumer and commercial contexts and did not reach medical settings. Moreover, the district court determined, the FCC's 2008 rulemaking would not apply here because Mais's wife gave his number only to the Hospital and not to the creditor, Florida United.

On the issue of the FCC, we won't include anymore on this. The Court found the FCC rules matter. We'll now turn to the consent issue as this is a more common issue in these cases. But first a bit of history on the regulations from the FCC.

In 2008, in response to a Petition for Expedited Clarification and Declaratory Ruling filed by ACA International, a trade organization of credit and collection companies,[3] the FCC after notice and comment issued a Declaratory Ruling "clarify[ing] that autodialed and prerecorded message calls to wireless numbers that are provided by the called party to a creditor in connection with an existing debt are permissible as calls made with the `prior express consent' of the called party." 2008 FCC Ruling, 23 FCC Rcd. at 559. Specifically, the FCC "conclude[d] that the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt." Id. at 564. The FCC "emphasize[d] that prior express consent is deemed to be granted only if the wireless number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed." Id. at 564-65. The Commission concluded that "the burden will be on the creditor to show it obtained the necessary prior express consent" because "creditors are in the best position to have records kept in the usual course of business showing such consent." Id. at 565. As in the 1992 FCC Order, the Commission found support for its interpretation of prior express consent from the legislative history of the TCPA, including the House Report, which stated that "[t]he restriction on calls to emergency lines, pagers, and the like does not apply when the called party has provided the telephone number of such a line to the caller for use in normal business communications." Id. at 564 (quoting H.R. Rep. No. 102-317, at 17).

In 2012, the FCC issued still another Report and Order that further interpreted the meaning of the prior express consent exception embodied in § 227(b)(1)(A) of the statute, though the Commission did not change the standard for debt collection calls made to cell phone numbers. See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 (2012 FCC Order), 27 FCC Rcd. 1830. The 2012 FCC Order required written prior express consent for autodialed or prerecorded calls to wireless or residential numbers that deliver a telemarketing message. Id. at 1838. It "eliminate[d] the established business relationship exemption for prerecorded telemarketing calls to residential lines" created by the FCC in 1992. Id. at 1845. And the Commission added an exemption for "all prerecorded health care-related calls to residential lines that are subject to HIPAA." Id. at 1852.

The FCC is concerned about consent. In essence, consent is an affirmative defense that the defendant bears the burden of proving after the plaintiff shows auto dialed/computer calls were made to plaintiff's cell phone.

While the 2008 FCC Ruling listed the completion of "a credit application" as an example of the provision of a cell phone number to a creditor, the Commission did so illustratively, not exclusively. 23 FCC Rcd. at 564. Similarly, the fact that the FCC's interpretation often is invoked in the context of consumer or commercial creditors does not lessen its application to medical debt collection. See Mitchem v. Ill. Collection Serv., Inc., No. 09 C 7274, 2012 WL 170968, at *1-2 (N.D. Ill. Jan. 20, 2012) (unpublished); Moise v. Credit Control Servs., Inc., 950 F. Supp. 2d 1251, 1253 (S.D. Fla. 2011) ("Based on the plain language of the TCPA and the [2008] FCC order, it is clear that if Plaintiff gave his cell phone number directly to [a medical laboratory], that would constitute express consent."); Pollock v. Bay Area Credit Serv., LLC, No. 08-61101-CIV, 2009 WL 2475167, at *1 (S.D. Fla. Aug. 13, 2009) (unpublished) (applying the 2008 FCC Ruling to calls made by a defendant "attempting to collect a debt . . . that arose from personal medical care").

When it comes to expectations for receiving calls, we see no evidence that the FCC drew a meaningful distinction between retail purchasers who complete credit applications and medical patients who fill out admissions forms like the Hospital's. A patient filling out a form from a healthcare provider may very well expect to be contacted about his health and treatment. But if the form explicitly states that the provided information will be used for payment and billing, the patient has the same reason to expect collection calls as a retail consumer. Though Mais might prefer a different rule, the FCC in no way indicated that its 2008 order distinguishes medical debtors. Florida United, which sought payment for medical services performed for Mais, qualifies as creditor under the 2008 FCC Ruling.

The lesson here is the type of debt does not matter under the 2008 FCC Ruling -- credit card, auto, medical, etc. The Ruling, just like in most case law contexts, gives us concepts that are then adapted to a specific situation. The plaintiff made another argument that the court dealt with as follows:

Mais also suggests that the 2008 FCC Ruling does not affect his claim because he did not "provide" his number to "the creditor" — neither he nor his wife personally transferred his cell phone number to Florida United or its collection agent, Gulf Coast. After all, his wife submitted the admissions forms and the cell phone number to a representative of the Hospital, an entity separate from Florida United and Gulf Coast, and the 2008 FCC Ruling "emphasize[d] that prior express consent is deemed to be granted only if the wireless number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed." 23 FCC Rcd. at 564-65 (emphasis added). Boiled down, Mois's argument turns on whether, under the FCC's interpretation of prior express consent, a called party "provides" his cell phone number to a creditor when (during the transaction creating the debt) he authorizes an intermediary to disclose his number to the creditor for debt collection.

This is interesting and it is not something that is explained in the 2008 Ruling. Notice how the court handles this:

The 2008 FCC Ruling does not offer an explicit answer to this question because it does not spell out in detail the meaning of "provide." Based on the regulatory and statutory context, however, we reject Mais's argument that the 2008 FCC Ruling only applies when a cell phone number is given directly to the creditor. Mais's narrow reading of the 2008 FCC Ruling would find prior express consent when a debtor personally delivered a form with his cell phone number to a creditor in connection with a debt, but not when the debtor filled out a nearly identical form that authorized another party to give the number to the creditor. Mais offers no functional distinction between these two scenarios, and we see no sign that the FCC thought a cell phone number could be "provided to the creditor" only through direct delivery. To the contrary, the 2008 FCC Ruling indicated that prior express consent existed when a cell phone subscriber "made the number available to the creditor regarding the debt." 23 FCC Rcd. at 567. Plainly, Mais's wife made his number available to Florida United by granting the Hospital permission to disclose it in connection with billing and payment.

In addition, the FCC recently ruled "that the TCPA does not prohibit a caller from obtaining consent through an intermediary." In re GroupMe, Inc./Skype Commc'ns S.A.R.L. Petition, 29 FCC Rcd. 3442, 3447 (2014). A provider of text messaging services asked the Commission to "clarify that for non-telemarketing voice calls or text messages to wireless numbers . . . the caller can rely on a representation from an intermediary that they have obtained the requisite consent from the consumer." Id. at 3444. The FCC after notice and comment issued a Declaratory Ruling that found "the TCPA is ambiguous as to how a consumer's consent to receive an autodialed or prerecorded non-emergency call should be obtained." Id. Exercising its interpretive discretion, the FCC explained that "allowing consent to be obtained and conveyed via intermediaries in this context facilitates these normal, expected, and desired business communications in a manner that preserves the intended protections of the TCPA." Id. at 3445. Of particular note here, the FCC said that, though the 2008 FCC Ruling "did not formally address the legal question of whether consent can be obtained and conveyed via an intermediary," the earlier order "did make clear that consent to be called at a number in conjunction with a transaction extends to a wide range of calls `regarding' that transaction, even in at least some cases where the calls were made by a third party." Id. at 3446. The FCC's recognition of "consent obtained and conveyed by an intermediary," id., strongly supports our conclusion that Mais's wife "provided" the cell phone number to the creditor through the Hospital.

Other FCC explications of the prior express consent exception also show that the appropriate analysis turns on whether the called party granted permission or authorization, not on whether the creditor received the number directly. See 2012 FCC Order, 27 FCC Rcd. at 1839 ("[R]equiring prior written consent will better protect consumer privacy because such consent requires conspicuous action by the consumer — providing permission in writing — to authorize autodialed or prerecorded telemarketing calls . . . ."); 1992 FCC Order, 7 FCC Rcd. at 8769 ("[P]ersons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary."). This conclusion is consistent with the legislative history: the House and Senate Reports explain that the TCPA imposes liability for calls made without the called party's "prior express invitation or permission." H.R. Rep. No. 102-317, at 2, 3, 13; S. Rep. No. 102-177, at 16 (1991). Thus, under the 2008 FCC Ruling a cell phone subscriber like Mais could provide his number to a creditor like Florida United — and grant prior express consent to receive autodialed or prerecorded calls — by affirmatively giving an intermediary like the Hospital permission to transfer the number to Florida United for use in billing.

This is a common sense approach. Sometimes we see companies try to make "consent" so broad that it loses all meaning. "Any number you have now or will in the future can be given to any company that we choose and you agree to never revoke consent."

Things like this are absurd. But in the Mais case the court found the "intermediary" was a reasonable business practice -- no evidence it was any company trying to get "too cute" to shield unrelated companies from TCPA liability.

Mais points out that the FCC concluded in its 2008 Ruling that "prior express consent provided to a particular creditor will not entitle that creditor (or third party collector) to call a consumer's wireless number on behalf of other creditors, including on behalf of affiliated entities." 23 FCC Rcd. at 565 n.38. Here, however, the Hospital did not call Mais on behalf of Florida United. Nor did the Hospital give Mais's number to a debt collector to make unauthorized calls on behalf of other creditors. Instead, with explicit permission from Mais's wife, the Hospital passed his cell phone number to Florida United, the creditor who provided radiology services to Mais during his hospitalization. Because Mais's wife specifically authorized that transfer of health information for billing purposes, "the wireless number was provided by the consumer to the creditor" in satisfaction of the prior express consent exception. Id. at 564.

Bottom line is consent can be passed to other companies if it is done in a reasonable way that is fully disclosed.

Also, while it is not expressly discussed in detail, the wife gave the husband's cell phone number when he presumably could not as he was admitted to the ER. No evidence he disapproved of this or revoked consent. This was not a spouse stealing an identity to get a cell phone, credit card, etc. This was one spouse taking another into an emergency room. It is unclear from Mais what the result would be if the wife, for example, for her own treatment listed her husband's cell phone number.

But at least in this situation, it was proper consent.

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.

November 19, 2014

TCPA Decision: Can You Revoke Consent For Calls To Your Cell Phone?

The TCPA is a hot legal issue as it can result in tens of thousands and even hundreds of thousands of dollars in damages for individual plaintiffs all related to computerized calls to cell phones. A big issue has been "Can you revoke consent to call your cell phone?"

The Eighth Circuit answered this "Yes" on September 26, 2014, in Brenner v. American Education Services (AES). Yes that is the AES that those with student loans often know too well....

The opinion is very short so we will include it all with our commentary below each quote.

Joshua Seth Brenner appeals the district court's adverse grant of summary judgment in his action against American Education Services (AES), brought pursuant to the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227. On de novo review, this court reverses and remands for further proceedings. See Butler v. Crittendon Cnty., Ark., 708 F.3d 1044, 1048-49 (8th Cir. 2013).

Brenner complained that AES violated the TCPA when it repeatedly called his cell phone number about his student loan debt, using an automatic telephone dialing system and prerecorded or artificial voice, without his consent, and continued to make such calls after he provided written notice to AES in July 2012, to stop calling him about his loan debt.

So in this opinion there is no dispute about whether an ATDS (automatic telephone dialing system) was used. Instead the issue centers on revoking consent.

The district court granted summary judgment to AES, finding that Brenner voluntarily provided his cell phone number to AES on numerous occasions, and expressly agreed to receive the type of calls made. This court agrees that Brenner gave express consent to receive calls from AES to his cell phone number by providing that number on multiple forbearance requests and he specifically authorized AES to use an automatic telephone dialing system to contact him at that number before the complained-of calls began. See Meyer v. Portfolio Recovery Assocs., LLC, 707 F.3d 1036, 1042 (9th Cir. 2012) (prior express consent is consent to call particular telephone number in connection with particular debt that is given before call in question is placed).

The timing of giving a cell phone number is still in dispute among courts -- the majority rule appears to be the number must be provided at the time of the transaction -- here the student loan application. This court, however, allows that numbers provided before the calls begin with specific authorization to use an auto dialer counts as prior express consent also.

The district court did not address Brenner's argument that he revoked his consent in July 2012. It is undisputed that AES continued to make calls to Brenner's cell phone after this date.

There have been some courts, primarily in the Western District of New York, that feel once consent has been given, it is either impossible or very difficult to take it away.

Thus, if Brenner effectively revoked his consent, summary judgment was not proper. While this court has not yet addressed the issue of revocation, two other circuit courts have concluded that prior consent to call one's cell phone may be revoked under the TCPA. See Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242, 1255-56 (11th Cir. 2014); Gager v. Dell Fin. Servs., LLC, 727 F.3d 265, 270-72 (3d Cir. 2013).

To my knowledge NO federal appellate court has taken the odd (well actually absurd) position that consent cannot be revoked. In what other areas of the law can you NEVER revoke consent -- just not a well thought out position. So Brenner recognizes this obvious truth that consent can be revoked.

The grant of summary judgment for AES is vacated and the case is remanded to the district court to consider whether Brenner's evidence supporting his contention that he revoked consent was sufficient to preclude summary judgment for AES, and for further proceedings as appropriate.

It will be interesting to see what the district court (trial court) rules is sufficient evidence of revoking. Some courts hold verbal is sufficient and some say written is required. In Brenner it looks like he did revoke it in writing but this is an issue to keep an eye on.

Take away lesson is consent can be revoked. We recommend that it be done in writing, by certified mail, and that language similar to this be used:

"Don't ever call my cell phone number of ______________. If you think I ever gave consent for this number to be called, I'm revoking it now."

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.

November 17, 2014

Decision on TCPA: Vicarious Liability For Text Messages

The TCPA (Telephone Consumer Protection Act) prohibits many types of auto dialed/computer dialed calls to cell phones unless prior express permission was granted by the person called at the time of the financial transaction. Text messages are considered to be computerized calls under the TCPA. This is so important to consumers and businesses as the damages are $500 per call and this can actually increase to $1500 per call or text. Damages can be enormous.

There have been issues and arguments related to what liability is there when one company hires another company to actually make the calls or send the text messages.

One of the more recent opinions on this subject is from the Ninth Circuit Court of Appeals on September 19, 2014, in the case of Gomez v. Campbell-Ewald Company (link is to Google Scholar listing for this case).

It is a rather lengthy opinion so I'll only include the relevant parts in quotations and then offer my thoughts on it.

Plaintiff Jose Gomez appeals adverse summary judgment on personal and putative class claims brought pursuant to the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227(b)(1)(A)(iii) (2012). Gomez alleges that the Campbell-Ewald Company instructed or allowed a third-party vendor to send unsolicited text messages on behalf of the United States Navy, with whom Campbell-Ewald had a marketing contract. Because we conclude that Campbell-Ewald is not entitled to immunity, and because we find no alternate basis upon which to grant its motion for summary judgment, we vacate the judgment and remand to the district court.

It is common for more than one company to be involved in the "campaign" or "broadcast" of calls and texts. We won't focus on the immunity issue but if that is important in one of your cases there is a good discussion of this in the opinion.

The facts with respect to Gomez's personal claim are largely undisputed. On May 11, 2006, Gomez received an unsolicited text message stating:

Destined for something big? Do it in the Navy. Get a career. An education. And a chance to serve a greater cause. For a FREE Navy video call [number].
The message was the result of collaboration between the Navy and the Campbell-Ewald Company,[1] a marketing consultant hired by the Navy to develop and execute a multimedia recruiting campaign. The Navy and Campbell-Ewald agreed to "target" young adults aged 18 to 24, and to send messages only to cellular users that had consented to solicitation. The message itself was sent by Mindmatics, to whom the dialing had been outsourced. Mindmatics was responsible for generating a list of phone numbers that fit the stated conditions, and for physically transmitting the messages. Neither the Navy nor Mindmatics is party to this suit.

There is no explanation for why the Navy and Mindmatics are not parties and it is not important for our discussion.

In 2010, Gomez filed the present action against Campbell-Ewald, alleging a single violation of 47 U.S.C. § 227(b)(1)(A)(iii), which states:

It shall be unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States—
(A) to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice— ...
(iii) to any telephone number assigned to a paging service [or] cellular telephone service. ...
Gomez contends that he did not consent to receipt of the text message. He also notes that he was 40 years old at the time he received the message, well outside of the Navy's target market. It is undisputed that a text message constitutes a call for the purposes of this section. See Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 952 (9th Cir. 2009) ("[W]e hold that a text message is a `call' within the meaning of the TCPA.").

After the court denied the motion, Campbell-Ewald moved for summary judgment, seeking derivative immunity under Yearsley v. W.A. Ross Construction Co., 309 U.S. 18 (1940). In opposition to the summary judgment motion, Gomez presented evidence that the Navy intended the messages to be sent only to individuals who had consented or "opted in" to receive messages like the recruiting text. A Navy representative testified that Campbell-Ewald was not authorized to send texts to individuals who had not opted in. The district court ultimately granted the motion, holding that Campbell-Ewald is "immune from liability under the doctrine of derivative sovereign immunity." Gomez v. Campbell-Ewald Co., No. CV 10-2007 DMG CWX, 2013 WL 655237, at *6 (C.D. Cal. Feb. 22, 2013). Gomez filed a timely appeal, arguing that the Yearsley doctrine is inapplicable.

The motion to dismiss involved whether the claims were "moot" by an offer of judgment. Again we are skipping the immunity issues and going to the more applicable discussion of liability when someone else actually sent the texts or calls.

Campbell-Ewald nevertheless argues that it cannot be held liable for TCPA violations because it outsourced the dialing and did not actually make any calls on behalf of its client. See 47 U.S.C. § 227(b)(1)(A)(iii) (rendering it unlawful "to make any call" using an automated dialing system). Gomez, in fact, concedes that a third party transmitted the disputed messages. Even so, Campbell-Ewald's argument is not persuasive.

There have been different viewpoints on this issue and this decision gives us some practical guidelines.

Although Campbell-Ewald did not send any text messages, it might be vicariously liable for the messages sent by Mindmatics. The statute itself is silent as to vicarious liability. We therefore assume that Congress intended to incorporate "ordinary tort-related vicarious liability rules." Meyer v. Holley, 537 U.S. 280, 285 (2003). Accordingly, "[a]bsent a clear expression of Congressional intent to apply another standard, the Court must presume that Congress intended to apply the traditional standards of vicarious liability. ..." Thomas v. Taco Bell Corp., 879 F. Supp. 2d 1079, 1084 (C.D. Cal. 2012), aff'd, ___ F. App'x ___, 2014 WL 2959160 (9th Cir. July 2, 2014) (per curiam). Although we have never expressly reached this question, several of our district courts have already concluded that the TCPA imposes vicarious liability where an agency relationship, as defined by federal common law, is established between the defendant and a third-party caller.[5]

This interpretation is consistent with that of the statute's implementing agency, which has repeatedly acknowledged the existence of vicarious liability under the TCPA. The Federal Communications Commission is expressly imbued with authority to "prescribe regulations to implement the requirements" of the TCPA. 47 U.S.C. § 227(b)(2). As early as 1995, the FCC stated that "[c]alls placed by an agent of the telemarketer are treated as if the telemarketer itself placed the call." In re Rules and Regulations Implementing the TCPA of 1991, 10 FCC Rcd. 12391, 12397 (1995). More recently, the FCC has clarified that vicarious liability is imposed "under federal common law principles of agency for violations of either section 227(b) or section 227(c) that are committed by third-party telemarketers." In re Joint Petition Filed by Dish Network, LLC, 28 FCC Rcd. 6574, 6574 (2013). Because Congress has not spoken directly to this issue and because the FCC's interpretation was included in a fully adjudicated declaratory ruling, the interpretation must be afforded Chevron deference. Metrophones Telecomms., Inc. v. Global Crossing Telecomms, Inc., 423 F.3d 1056, 1065 (9th Cir. 2005) (citing Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 980-85 (2005)) (other citations omitted), aff'd, 550 U.S. 45 (2007); see also Chevron, U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 843 (1984) ("If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation." (footnote omitted)).

A pretty common sense approach and this is fairly well settled now. But the defendant had a clever argument -- turns out "too clever" but still give it credit for making this argument which you will see next.

Campbell-Ewald concedes that the FCC already recognizes vicarious liability in this context, but argues that vicarious liability only extends to the merchant whose goods or services are being promoted by the telemarketing campaign.

So it argues that as a "marketing" company not actually selling the goods or services, it cannot be responsible when it hires a company to do the actual calling or texting. The court did not buy this.

Yet the statutory language suggests otherwise, as § 227(b) simply imposes liability upon "any person"—not "any merchant." See Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 221 (2008) (interpreting the use of "any" as "allencompassing"); 47 C.F.R. § 64.1200 (interpreting the phrase "any person" to reach individuals and entities). And although the FCC's 2013 ruling may emphasize vicarious liability on the part of merchants, the FCC has never stated that vicarious liability is only applicable to these entities.[6] Indeed, such a construction would contradict "ordinary" rules of vicarious liability, Meyer, 537 U.S. at 285, which require courts to consider the interaction between the parties rather than their respective identities. See RESTATEMENT (THIRD) OF AGENCY (2006) §§ 2.01, 2.03, 4.01 (explaining that agency may be established by express authorization, implicit authorization, or ratification).

Given Campbell-Ewald's concession that a merchant can be held liable for outsourced telemarketing, it is unclear why a third-party marketing consultant shouldn't be subject to that same liability. As a matter of policy it seems more important to subject the consultant to the consequences of TCPA infraction. After all, a merchant presumably hires a consultant in part due to its expertise in marketing norms. It makes little sense to hold the merchant vicariously liable for a campaign he entrusts to an advertising professional, unless that professional is equally accountable for any resulting TCPA violation. In fact, Campbell-Ewald identifies no case in which a defendant was exempt from liability due to the outsourced transmission of the prohibited calls.

Moreover, our own precedent belies any argument that liability is not possible. In our seminal case regarding text messages and the TCPA, we allowed a case to proceed against an analogous marketing consultant who was not "responsible for the actual transmission of the text messages." See Satterfield, 569 F.3d at 951. In Satterfield, a publisher had instructed a marketing consultant to create a text message campaign advertising a new Stephen King novel. Id. at 949. The consultant in turn outsourced the recipient selection and message transmission to two other subcontractors. Id. A recipient sued both the publisher and the marketing consultant for alleged violations of the TCPA. Id. at 950. The district court entered summary judgment in favor of both defendants, holding that the cellular user had consented to receive advertisements when it signed its cellular service contract. Id. We ultimately reversed and remanded the case, holding (inter alia) that the cellular service agreement did not constitute "express consent" to receive the advertisement in dispute. Id. at 955. So although we did not explain the basis of the defendants' potential liability, we implicitly acknowledged the existence of that basis. The present case affords an opportunity to clarify that a defendant may be held vicariously liable for TCPA violations where the plaintiff establishes an agency relationship, as defined by federal common law, between the defendant and a third-party caller.

So what is the take home lesson from Gomez? That not only the company that actually makes the calls or sends the texts can be responsible, but also the companies that hire the actual callers can be liable as well.

From a defense standpoint, lawyers need to advise "merchants" and marketing companies that they cannot simply shield themselves by having someone else "do the deed" of making the calls.

And from the consumer standpoint where I live, we want to always look to suing not only the company that made the calls or sent the texts but find out who is behind that company. And then who is behind that one?

Defendants like to play "shell games" with this area of the law and we have to keep digging to find all of the parties that are responsible for what happened.

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.

September 20, 2014

Complete 24 minute video on your 5 options when sued by debt collector in Alabama

You can now watch the above video which gives you the complete overview and discussion of the 5 options you have when you are sued by any debt collector or debt buyer in Alabama including Cavalry, LVNV Funding, Midland Funding, Portfolio Recovery, Unifund, etc.

Even if you believe you know what you want to do, I suggest you go through the process of watching this video to make sure that you have thought about each of the five options.

Those options are:

1. File Bankruptcy
2. Fight the case on your own
3. Settle the case on your own
4. Hire a lawyer to fight the case for you
5. Hire a lawyer to settle the case for you

Let's chat about these briefly.

Bankruptcy is an extreme option we do not often recommend. When necessary, it works, but it "has a lot of side effects" -- credit damage, harms your ability to get financing in the future even outside your credit score, you can't file chapter 7 again for 8 years, etc.

The next two options are do it yourself options. You can fight the case on your own -- you'll save money and you'll need to spend time to make this work. Or you can settle the case on your own -- normally about 50% in a lumpsum or 100% paid over 2-3 years.

The final two options involve hiring a lawyer. We combine these as normally we give the collector a simple choice.

1. Let's fight the case and if we win we will look at suing the debt collector in federal court as we have done dozens and dozens of times.


2. Let's settle the case where everybody walks away. Delete the credit reporting. No one is paid any money. The case is over.

If you have questions about your options when sued in Alabama, please feel free to get in touch with us by calling us at 205-879-2447 or contacting us through our website

John G. Watts
Watts & Herring, LLC
Birmingham, Alabama

ps -- click here if you want to read a more indepth article which also has the video.

August 20, 2014

Video: 5 options when sued by collector in Alabama -- Hire lawyer to settle the case

Hiring a lawyer to settle the case is a valid option. The objective here is to resolve the case and to get the best deal possible, including getting rid of any credit reporting by the debt collector who sued you.

By way of reminder, the five options you have when sued by a debt buyer (such as LVNV, Midland, Portfolio, etc) are:

1. Bankruptcy
2. Fight the case on your own
3. Settle the case on your own
4. Hire a lawyer to fight the case
5. Hire a lawyer to settle the case

Each option has advantages and disadvantages (particularly bankruptcy which we rarely recommend).

When looking at hiring a lawyer to settle the case, you need to know what amount will it cost you (if anything) to pay the collector and how much the lawyer fee will be. Also, what else will you receive in the deal? Will you get credit reporting deleted? Will a 1099 be issued for "debt forgiveness?"

The lawyer may also file an answer for you -- you need to verify exactly what you are hiring the lawyer to do for you and what will happen if the lawyer can't get the case settled.

We'll be glad to help you think through your options and figure out which option is best for you.

If you have questions about your options when sued in Alabama, please feel free to get in touch with us by calling us at 205-879-2447 or contacting us through our website

John G. Watts
Watts & Herring, LLC
Birmingham, Alabama

August 17, 2014

Video: 5 options when sued by collector in Alabama -- Hire lawyer to fight the case

Hiring a lawyer to fight the case is a valid option. The objective here is to win the case so you owe the debt buyer nothing and you may be entitled to sue the debt collector for filing a bogus suit against you.

By way of reminder, the five options you have when sued by a debt buyer (such as LVNV, Midland, Portfolio, etc) are:

1. Bankruptcy
2. Fight the case on your own
3. Settle the case on your own
4. Hire a lawyer to fight the case
5. Hire a lawyer to settle the case

Each option has advantages and disadvantages (particularly bankruptcy which we rarely recommend).

When looking at hiring a lawyer to fight the case, the biggest disadvantage is having to pay the lawyer fee. This fee can range from $1,000 in small claims case, $2,000-$4,000 in district court, and (based upon the amount sued on) several thousand to as much as ten thousand in circuit court. So you have to investigate to see if the advantages justify paying a lawyer fee.

The lawyer will file an answer for you and handle the case for you up to and including trial.

The advantages are you will save time (as you are spending money), you would expect to have a better chance of success with a lawyer who knows what he or she is doing, and you may be able to sue the debt collector/debt buyer for suing you and credit reporting on you.

So does it make sense for you to hire a lawyer?

It depends.

If you want absolute certainty, then you file bankruptcy or settle the case. But if you want to try to win the case then hiring a lawyer may be a very smart move as we know the rules of evidence and how to fight these guys as we have been specifically fighting debt collection lawsuits for many years and trying cases in state and federal court for almost two decades. There is more reward to go with the higher risk.

We'll be glad to help you think through your options and figure out which option is best for you.

If you have questions about your options when sued in Alabama, please feel free to get in touch with us by calling us at 205-879-2447 or contacting us through our website

John G. Watts
Watts & Herring, LLC
Birmingham, Alabama

August 13, 2014

Video: 5 options when sued by collector in Alabama -- Settle case on your own

Settling the lawsuit on your own (without hiring a lawyer) can often be a good option when you are sued by a debt collector in Alabama.

By way of reminder, the five options you have when sued by a debt buyer (such as LVNV, Midland, Portfolio, etc) are:

1. Bankruptcy
2. Fight the case on your own
3. Settle the case on your own
4. Hire a lawyer to fight the case
5. Hire a lawyer to settle the case

Each option has advantages and disadvantages (particularly bankruptcy which we rarely recommend).

When looking at settling the case on your own (also called being "pro se"), the main advantage is there is no lawyer fee. So you save money. And you control the case -- if you pay the money agreed to, the case is over.

The main disadvantage is you don't have a lawyer so you are on your own in negotiating with the debt collector and in signing the paperwork settling the case. You don't spend money but you will need to spend time to prepare yourself. Also, the account will normally stay on your credit report and you will likely get a 1099 for debt forgiveness the following January after settling the debt.

Normally you will be looking at paying about 50% of the amount sued for in a lump sum. Occasionally less and sometimes more but 50% is a good rule of thumb for a lump sum.

Or you can pay the whole amount over time -- usually 1-3 years.

We'll be glad to help you think through your options.

If you have questions about your options when sued in Alabama, please feel free to get in touch with us by calling us at 205-879-2447 or contacting us through our website

John G. Watts
Watts & Herring, LLC
Birmingham, Alabama