In an important decision for intermediaries in the telemarketing process, a Washington federal court ruled that a company providing services for telemarketing purposes was exempt from liability under the Telephone Consumer Protection Act as a common carrier.
Rinky Dink, Inc., sued Electronic Merchant Systems for making prerecorded telemarketing calls in violation of the federal statute and Washington state law, naming CallFire as an additional defendant.
Described by EMS as “an online provider,” CallFire provides an online platform for “voice and text connectivity” to customers that design either calling or texting campaigns through its Web site. EMS representatives created “campaigns” with CallFire by selecting the phone numbers to be called, the scheduled call times, and the time period for the campaign. For the message itself, EMS drafted a scripted message and hired an actor to record the message. CallFire was not involved in the creation or the content of the messages.
CallFire moved for summary judgment on two grounds: that as a common carrier it was exempt from liability under the TCPA and that it did not initiate the calls to plaintiff as required by state law.
The court agreed with CallFire on both counts.
“Common carriers are not liable under the TCPA absent a ‘high degree of involvement or actual notice of an illegal use and failure to take such steps to prevent such transmissions,’” U.S. District Court Judge John C. Coughenour explained.
He applied a two-part inquiry, asking first if CallFire held “itself out indifferently to all potential users or, if serving a legally-defined class, [held] itself out indiscriminately to serve all within that class”? CallFire satisfied the “key factor” of offering indiscriminate service to whatever public its service may legally and practically be of use, the court said, with “no indication that CallFire’s terms of service apply differently to any of its customers.” Importantly, the court found that “[c]ommon carriers need not be officially recognized by the Federal Communications Commission.”
As to the second part, the court considered CallFire’s involvement in the design and choosing of the messages. CallFire “allow[ed] customers to transmit messages of their own design and choosing,” Judge Coughenour said. “EMS drafted the message, hired an actor to record the message, selected the phone numbers to be called, and chose the locations and timing of the calls,” the court wrote. “There is no genuine dispute; EMS was the sole architect of the calls placed to plaintiffs.”
Rinky Dink tried to convince the court that because CallFire transmitted calls depending on network availability, it therefore had control over whether the messages were actually delivered, using the example of power outages during Hurricane Sandy. “Plaintiffs appear to illogically suggest that, because forces outside of CallFire’s control may limit the transmission of phone calls at its customer’s specified time, CallFire is therefore in direct control of the calls made,” the judge wrote. He found the argument did not present a genuine issue of material fact.
The plaintiff’s contention that the inclusion of fraud detection in CallFire’s terms of service undermined its status as a common carrier also failed to sway the court. “[T]elephone companies generally considered to be common carriers adopt similar practices,” Judge Coughenour wrote, and merely requiring customers to check their own activities for legal compliance did not render CallFire too highly involved for the exemption, particularly as the company did not edit any recipient lists or content.
Neither did CallFire have actual knowledge of any unlawful activity, the court said. Despite an enforcement action filed by the Federal Trade Commission against CallFire in 2013, the court noted that “none of the allegations in that lawsuit fell under the TCPA” and that the issues involved had “nothing to do with the calls placed by EMS.”
“With regard to CallFire’s liability under the TCPA, there remains no genuine issue of material fact: CallFire is a common carrier, was not involved in EMS’s message transmission to a ‘high degree,’ and did not have actual knowledge of the EMS calls,” Judge Coughenour concluded. “As such, CallFire does not fall within the scope of the TCPA and its motion for summary judgment with regard to plaintiffs’ TCPA claims against it is hereby granted.”
As for the Washington state law claims, the court found that CallFire did not “initiate” the phone calls at issue. Although the term is not defined by the statute, the court looked to the dictionary to determine that CallFire did not “cause the beginning of something.” CallFire’s generation of code and making it available to downstream servers was automatic in nature, the court said, and initiated by CallFire’s customers.
To read the order in Rinky Dink, Inc. v. Electronic Merchant Systems, click here.
Why it matters: The decision provides some breathing room for companies that provide services related to telemarketing calls or text messages by recognizing CallFire as a “common carrier” exempt from TCPA liability, even though the company has not been officially recognized as such by the Federal Communications Commission. As plaintiffs increasingly name third parties and try to hold intermediaries liable under the statute, businesses can look to this decision for guidance about how not to be too “highly involved” and achieve common carrier status.