Executive Summary

The Telephone Consumer Protection Act (“TCPA”) was enacted in 1991 for the purpose of restricting unwanted telephone calls to consumers. Today the scope of the TCPA extends well beyond the telephone-based solicitations that existed in 1991, and governs most companies that contact their customers by text message, fax, or pre-recorded message. It also imposes special requirements for communications to a consumer’s mobile telephones.

Although the TCPA has existed for more than two decades, it recently received renewed attention from the plaintiffs’ class action bar and the media due to a number of high profile class action settlements with prominent retail, financial, and service companies. While at least one industry association has suggested that the volume of TCPA cases has doubled in 2013, and others have described TCPA litigation as “dominating” the field of consumer class action litigation, this is the first published study to analyze the volume and trends of TCPA class action litigation.

This report analyzes TCPA class action complaints filed between January and June 2013 (the “period”) in an effort to help companies better understand, and quantify, the risk that they will be named in a class action lawsuit. The following are key findings concerning complaint filings over this period:

  • A total of 40 class action complaints were filed over the period. The rate of complaint filings remained relatively stable throughout the period.
  • Over the period, complaints were evenly split between those that involved text messages, faxes, and mobile voice calls. A de minimis number of cases involve residential (i.e., nonwireless) telephone calls.
  • Within the period, class actions involving fax transmissions appear to be on the rise – with more complaints filed in Q2 than in Q1; class actions involving text messages and mobile outbound calls peaked in March and declined in the following months.
  • There is greater diversity among the forums in which TCPA cases are filed than is found in other types of advertising class action litigation; nonetheless, cases continue to congregate in the federal and state courts of California and Florida.
  • Although the financial sector was one of the largest industries to be targeted by plaintiffs’ attorneys (10% of complaints filed), complaints have been filed across industry segments.
  • Almost all complaints have alleged putative national classes; most complaints avoid alleging state sub-classes under state telemarketing statutes.
  • Complaints that have alleged state law violations almost exclusively focus on the Illinois and California state telemarketing statutes.
  • Complaints overwhelmingly focus on an alleged failure to obtain consumers’ prior consent. Relatively few cases allege a failure by a company to screen numbers against the national donot-call list, to screen numbers against a company’s entity specific do-not-call list, or to screen numbers against state mandated do-not-call lists.
  • 55 plaintiffs firms were involved in filing TCPA complaints during the period. Although several plaintiffs firms are involved in more than one case, from a volume perspective no firm has distinguished itself as the leader in this space.

In October of 2013, a new Federal Communication Commission (“FCC”) rule is scheduled to go into effect that will require a company to obtain “express written consent” before using autodialing technology to contact consumers on their mobile telephones.1

As text messaging has become an integral part of the mobile and online advertising strategies of many companies, and many companies use autodialing to send text messages, the new rule will have a far-reaching impact and is likely to lead to additional class action litigation.

Part 1: Type of Telemarketing (Fax, Mobile, Residential)

Although the largest number of class action complaints focused on the use of text messages (37%), there was almost an equal number of complaints that involved faxes (31%) and unsolicited mobile calls (28%). The following chart provides a breakdown of the media that is the focus of the class action complaints:

Click here to view graph.

Part 2: Volume of Litigation

A total of 40 complaints were filed during the period, with an average of six complaints filed per month. The volume of complaints between months was fairly constant, with the exception of May, when one law firm filed three class actions related to fax communications. With regard to the complaints filed concerning specific types of technologies, complaints involving unsolicited text messages and calls to mobile telephones declined in in the second quarter, whereas cases involving fax communications significantly increased. The following chart shows the quantity of litigation throughout the period.

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Part 3: Favored Courts

During Q1 and Q2, complaints were filed in 15 different federal district courts, although almost half of all cases were filed in district courts in California or Illinois. Among those state courts from which complaints could be identified, Illinois and Washington appear to be preferred state forums. The following provides a breakdown of complaint filings by court:

Click here to view graph.

Part 4: Litigation By Industry

Plaintiffs appear to be targeting a broad spectrum of industries; there is far less concentration by industry category than is seen among other types of consumer class action litigation. For example, whereas the top three industries that are the subject of class action complaints alleging unfair or deceptive trade practices account for over 66% of the total complaint volume, the top three industries that are the subject of TCPA class action complaints (marketing companies, financial service companies, and debt collection or telecom) account for only 30% of the complaint volume. See Zetoony & Goldman, Trends in Advertising Class Actions: Second Quarter 2013. The following chart provides a breakdown of TCPA complaints by the industry in which the defendant operates.

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Part 5: Scope of Alleged Class (National v. State)

As indicated in the following chart, the vast majority (88%) of TCPA complaints allege a putative class that is national in scope. This diagram treats cases as national in scope so long as a complaint alleges a national class even if the complaint also alleges one or more single-state subclasses.

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Part 6: Primary Legal Theory Alleged

The vast majority of complaints (88%) alleged a failure to obtain prior consent as the primary legal theory. The next most common primary legal theory, a failure to include opt-out notice, was alleged as the primary legal theory in only six percent of complaints.

The following chart provides a breakdown of the primary basis upon which the complaint alleged that the TCPA was violated. If a complaint included more than one legal theory (e.g., failure to obtain consent before sending a text message and failure to screen against entity-specific Do Not Call list) then this chart categorizes that complaint based on the legal theory predominantly discussed.

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Part 7: Variety of Legal Theories Alleged

The most common legal theory alleged in TCPA complaints in the first two quarters of 2013 was a failure to obtain prior consent, with 94% of complaints alleging that legal theory. The next most common legal theory alleged was a violation of a state telemarketing statute, which was included in 39% of complaints. Failure to include opt-out notice and conversion followed in 22% and 14% of complaints, respectively. Other legal theories (failure to screen against the national DNC list, failure to screen against the entity DNC list, unlawful enrichment and breach of contract) were alleged in a small percentage of cases (4% each).

The following chart provides a breakdown of all of the grounds alleged in the complaints. The percentages collectively exceeds 100% as many complaints included more than one legal theory. For example, a complaint that alleged that a company violated the TCPA by sending a fax without obtaining the express consent of the recipient and violated the TCPA by failing to include the optout language at the bottom of the fax would be included in both categories.

Click here to view graph.

Part 8: Preferred State Law.

A number of states have passed telemarketing legislation that is modeled after the TCPA or the related Telemarketing and Consumer Fraud and Abuse Act (the “Telemarketing Act”) and the Federal Trade Commission’s rules implementing that Act. Although the majority of TCPA litigation alleges causes of action under only the TCPA, a significant number of complaints alleged violations of the Illinois and California telemarketing statutes. The following shows the state telemarketing statutes that have also been included within class action complaints.

Click here to view graph.

Part 9: Leading Plaintiffs Firms

Approximately 55 plaintiffs firms were involved in the complaints filed during the period. Although there were no clear “leaders” by volume of complaints filed, the following firms filed the most TCPA cases during the period:

Bock & Hatch LLC

Edelman, Combs, Latturner & Goodwin LLC

Hyde & Swigart

Kazerouni Law Group, APC

Law Offices of Douglas J. Campion

Law Offices of Daniel G. Shay

Law Offices of Steven E. Kaftal

Williamson & Williams

Part 10: Methodology

Complaints included within the data analyzed by this report were identified within the Westlaw Pleadings library as containing the phrase “class action” in conjunction with “TCPA,” “telemarketing,” “Telephone Consumer Protection Act,” 47 USC 227, 47 CFR 64.1200, “junk fax,” or spam. This report covers those complaints filed in the first and second quarters of 2013.