In a positive development for financial institutions and other businesses looking to communicate with customers via phone, a federal district court dismissed a Telephone Consumer Protection Act (TCPA) suit based on the plaintiff's lack of a concrete injury. Manatt represented SQM US, Inc., in this action.

What happened

Anton Ewing filed suit in California federal court against Blue Shield of California Life & Health Insurance Co. and SQM US, Inc., alleging that on October 21, 2015, SQM called his cell phone on Blue Shield's behalf using an automatic telephone dialing system (ATDS). Ewing claimed that he did not provide his cell number to the defendants or give them permission to call his cell phone; he also alleged he incurs a charge for all incoming calls on the phone.

Based on this single call, Ewing asserted claims for negligent and willful violations of the TCPA and sought to represent a class composed of other call recipients within a four-year period.

The defendants moved to dismiss the suit, arguing that Ewing lacked standing because he had not suffered a concrete injury caused by the alleged TCPA violation. While the doctrine of Article III standing has multiple components, the defendants focused on the need for plaintiffs to suffer an injury in fact, relying heavily on the U.S. Supreme Court's recent decision in Spokeo v. Robins.

As the Justices explained in Spokeo, a "bare procedural violation, divorced from any concrete harm," does not satisfy the injury-in-fact requirement of Article III. A plaintiff does not "automatically satisf[y] the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right. Article III standing requires a concrete injury even in the context of a statutory violation."

U.S. District Court Judge Cathy Ann Bencivengo agreed with the defendants that Ewing failed to assert a concrete injury based on Spokeo.

"The only allegation in the [complaint] that arguably relates to any injury to Plaintiff is the claim that the cellular telephone Defendants called is 'assigned to a cellular telephone service for which Plaintiff incurs a charge for incoming calls,' " the court said, assuming Ewing actually incurred a charge for the defendants' single survey call to his cell phone.

"Even with this assumption, the [complaint] does not adequately allege standing because it does not, and cannot, connect this claimed charge with the alleged TCPA violation—Defendants' use of an ATDS to dial his cellular telephone number," the judge wrote. "Put differently, Plaintiff does not, and cannot, allege that Defendants' use of an ATDS to dial his number caused him to incur a charge that he would not have incurred had Defendants manually dialed his number, which would not have violated the TCPA. Therefore, Plaintiff did not suffer an injury in fact traceable to Defendants' violation of the TCPA and lacks standing to make a claim for the TCPA violation here."

The court was not persuaded by Ewing's arguments in his opposition that he sustained injury by wasting time answering and addressing the defendants' call and that the call depleted his phone's battery.

"As with the charge Plaintiff allegedly incurred because of the call, these injuries are not connected to Defendants' alleged use of an ATDS to dial his number," the court emphasized. "Here, Mr. Ewing would have been no better off had Defendants dialed his number manually (in which case they would have refrained from violating the TCPA). He would have had to expend the same amount of time answering and addressing Defendants' manually dialed telephone call and would have incurred the same amount of battery depletion. Further, that the use of an ATDS may have allowed Defendants to place a greater number of calls more efficiently did not cause any harm to Plaintiff."

Again relying on Spokeo, Judge Bencivengo concluded that Ewing's "alleged concrete harm … was divorced from the alleged violation of the TCPA," meaning he could not satisfy the standing requirements of Article III. Finding Ewing would be unable to allege harm arising from the single call as a matter of law, the court granted the defendants' motion to dismiss with prejudice.

To read the order in Ewing v. SQM US, Inc., click here.

Why it matters

Financial services companies communicate with their customers frequently as an essential part of their business. While these communications are typically expected and desired, that doesn't shield even the most well-intentioned companies from the explosion of TCPA litigation seen the past few years. In this climate, many companies struggle to balance communicating with their customers and warding off litigation. Good compliance is key, but meritless suits still abound. The Ewing decision helps shift the pendulum toward businesses and can be a valuable tool to companies faced with TCPA suits. The decision may also signal the beginning of a shift away from the pro-plaintiff TCPA decisions of the past few years and toward greater judicial skepticism of these claims.