Last Friday, the Third Circuit Court of Appeals breathed new life into a Telephone Consumer Protection Act (“TCPA”) class action lawsuit against multinational tech giant Yahoo Inc. (“Yahoo”), vacating an earlier trial court decision in Yahoo’s favor and remanding the case for further proceedings.

Why is Yahoo back in the TCPA crosshairs?

Trial Court Dismisses TCPA Class Action

In December 2011, Philadelphia resident Bill Dominguez bought a new smartphone. The telephone number assigned to Dominguez’s new phone was previously owned by a person who had opted into Yahoo’s “Mail Alerts” program, which delivers SMS text messages to a Yahoo user when the consumer receives a new email to his or her Yahoo email account. According to court documents, consumers must enter a password and access a Yahoo account in order to turn off Mail Alerts. Despite his complaints to Yahoo, the Federal Trade Commission (“FTC”) and the Federal Communications Commission (“FCC”), Dominguez alleges that he received approximately 50 to 60 unsolicited text messages from Yahoo every day, at all times of the day and night, over the course of 17 months (27,809 text messages in total).

In April 2013, Dominguez filed a TCPA class action lawsuit on behalf of each Pennsylvania, New Jersey and Delaware resident who: (1) purchased a cell phone with a telephone number previously associated with a Yahoo account; and (2) received unsolicited text messages from Yahoo on or after April 10, 2009. The plaintiff alleged that Yahoo violated the TCPA by using an automatic telephone dialing system (“ATDS” or “autodialer”) to deliver SMS text messages to consumers without receiving proper consent.

The trial court granted Yahoo’s motion for summary judgment in March 2014, dismissing the TCPA class action. Waxing poetic, U.S. District Judge Michael M. Baylson sympathized with Dominguez: “Victims of circumstance are often portrayed by Shakespeare – Hamlet, Othello, Shylock; and in opera, Verdi’s Don Carlos, who without fault, loses his fiancée, Elisabeth of Valois, to his own father, King Phillip of Spain, who marries Elisabeth to ensure peace with France. In this case, Plaintiff Bill Dominguez is also a victim of circumstance.” However, as we have previously reported, the trial court ultimately determined that Dominguez did not offer any evidence to show that Yahoo’s system had the capacity to randomly or sequentially generate telephone numbers (as opposed to simply storing telephone numbers), and therefore functioned as an ATDS in violation of the TCPA. Dominguez appealed the decision to the Third Circuit.

Third Circuit Vacates Trial Court Decision, Remands for Further Proceedings

On October 23, 2015, the Third Circuit issued an opinion vacating the trial court’s judgment and remanding the TCPA class action for further proceedings. In doing so, the Court referenced the FCC’s July 2015 Ruling and Order, which takes an expansive and controversial stance on the TCPA’s autodialer definition.

Despite noting that the FCC’s guidance on the matter is “hardly a model of clarity,” the Court was not convinced that a reasonable trier of fact could not find Yahoo’s text messaging system to be an autodialer. “Because this is an issue of heightened importance in light of the 2015 FCC Ruling, and the District Court did not previously have the benefit of the FCC’s ruling in addressing the issue,” the Court stated, “remand is appropriate to allow that Court to address more fully in the first instance whether Yahoo’s equipment meets the statutory definition.”

Protect Yourself from TCPA Liability

We have written extensively about increased regulatory interest in autodialers, as well as text messages delivered to consumer cell phones. This case provides further proof that the failure to ensure strict adherence to TCPA restrictions involving use of an ATDS can have disastrous consequences. Accordingly, it is imperative to have telemarketing practices and procedures examined by experienced counsel prior to embarking on any new telemarketing campaign.