A string of recent court cases ruling that text messages are “calls” under the Telephone Consumer Protection Act (TCPA) has resulted in a sharp increase in class action law suits filed against well-known companies that have advertised via text message. In these cases, class action plaintiffs seek to recover $500 to $1,500 per text message sent. Faced with plaintiff-friendly court decisions and the potential for big damage awards, defendants are being forced into expensive settlements in these cases.
Designed to reduce the expense and annoyance associated with “telemarketing,” the TCPA is a 1991 federal statute that regulates unsolicited marketing calls and the use of automated telephone equipment. Among other provisions, the TCPA specifically prohibits using automatic telephone dialing systems to make “calls” to a wireless telephone without the “prior express consent” of the party receiving the call. Providing for damages of $500 per violation or $1,500 per willful violation, the TCPA is lucrative for class action plaintiffs and their lawyers and has previously generated successful class action litigation against advertisers sending “spam faxes.”
Although the TCPA does not expressly apply to text messages, due to the large damages available and the success of earlier class action litigation, plaintiffs have begun to test the courts’ willingness to entertain TCPA class action lawsuits based on text messages. Surprisingly, and much to the chagrin of companies that have advertised by sending unsolicited text messages to consumers, courts are overwhelmingly siding with plaintiffs. In a growing number of decisions, including an opinion by the Ninth Circuit Court of Appeals, courts addressing this issue agree with plaintiffs that text messages are “calls” subject to the TCPA. In fact, recent cases have arguably broadened TCPA liability, holding that it is not even necessary that the plaintiff actually be charged for the text message by the wireless service provider and rejecting arguments that the defendant obtained the plaintiff’s consent to receive the message through a third party.
Nationwide, numerous well-known companies have been sued in TCPA class actions based on text message marketing campaigns, including Domino’s Pizza, Wenner Media, Burger King, and other major media companies, retailers, and restaurant chains. Although many of these cases are still pending, those that have been settled have resulted in costly class action settlement agreements. Facing up to $90 million in damages, Simon & Schuster agreed to settle a TCPA text message class action case for a reported $10 million, including $2.725 million in attorneys fees and initially entitling class members to $175 per text message received. A major film company has reportedly agreed to a $16 million settlement related to a 2005 mobile marketing campaign, with class members initially entitled to $200 per text message. Another large retailer reportedly funded a $7 million class action settlement, which included $1.75 million in attorneys fees.
Companies employing text message advertising need to be aware of this growing trend and should alter marketing practices accordingly. Unless the TCPA is amended by Congress or judicial decisions begin to limit liability under the statute, the trend toward more TCPA lawsuits will continue and likely accelerate.