The Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, has become the darling of the plaintiff class action industry.  Too often the press has reported on very large dollar settlements arising out of TCPA claims.  Recent examples include a September 2, 2014, approval of a $32 million settlement of six pending TCPA class action suits against Bank of America, involving 7 million class members.  Similarly, Capital One recently agreed to pay $75 million after plaintiffs’ alleged the financial institution used an auto-dialer to call customer cell phones without the required consent.  While the large dollar settlements involving large institutions may catch the headlines, all financial institutions should understand that the TCPA applies to them, and even indirectly to them, if certain vendors violate the Act.  There is also concern that an opportunistic plaintiffs’ bar will soon seek to replicate their litigation business model by bringing copy-cat lawsuits on a more local level against smaller institutions.

There are few real defenses to claims asserted under the Act, and proven violations yield statutory damages of $500 per incident, which in many cases can be trebled per incident.  Under the TCPA, before a business may text or call a customer on the customer’s cell or smart phone, using an automatic telephone dialing system or artificial or pre-recorded message, the business must have the customer’s “prior express consent.” In re Rules and Regulations Implementing Telephone Consumer Protection Act 1991, Declaratory Ruling 23 FCC Rcd. 559 (Jan. 2008).  If any part of the communication contains a marketing message, the business must obtain the customer’s “express written consent.”  In many instances, the TCPA requires the business to provide an opt-out mechanism as part of the artificial or pre-recorded message.1  Alleged violations of these rules, and others, have been the basis of many class action lawsuits involving debt collection, marketing and other calls to customers.  In many instances, the cases will turn on whether the customer provided their “prior express consent” to be called or texted on their cell or smart phones.

As recent lawsuits settlements attest, the plaintiffs’ bar has had a financial field day with the TCPA.  But chinks in their game plan are slowly emerging, as the courts grapple with the ambiguities of this older law’s application to the new realities of our cellularly connected world.  One example of important note is Mais v. Gulf Coast Collection, 2014 WL 4802457, where the Court held that providing a cell number on a hospital admission form was “prior express consent” consistent with previous FCC rulings.  This is a significant decision involving the binding application of the FCC’s interpretation on rulings that merely providing a cell number is “prior express consent” to be called in certain situations.

Since at least 2008, the FCC has advised through its orders that a party gives “prior express consent” to be auto called on their cell phone when they provide their cell phone number to a creditor as part of the application process for extending credit and creating a debt.  Nevertheless, numerous courts have struggled with the “prior express consent” requirement, and whether a customer who has provided a cell number has in fact provided “prior express consent.”

Most courts have followed the FCC’s interpretation of “prior express consent.” See, Van Patten v. Vertical Fitness Group, LLC, 2014 WL 2116602 (S.D. Cal. May 20, 2014) (providing cell number to one gym was consent to be called by renamed and rebranded gym 3 years after customer cancelled membership); Baird v. Sabre Inc., 995 F. Supp 1100 (C.D. Cal. 2014) (providing cell number to airline was consent to texts concerning flight related matters); Emanuel v. Los Angeles Lakers, Inc., 2013 WL 1719035, *6 (C.D. Cal. April 18, 2013) (following several other decisions, the court concluded that providing cell number during transaction is prior express consent to receive confirmatory text message); Roberts v. Paypal, Inc., 2013 WL 2384242, *7 (N.D.Cal. May 30, 2013) (defendant's summary judgment motion granted when court found that plaintiff consented to text messages by providing his cell phone number); Jamison v. First Credit Services, 2013 U.S. Dist. LEXIS 43978 *45 (N.D.Ill. May 28, 2013) (class certification denied, finding individualized consent issues predominated because evidence showed that a significant percentage of the putative class members consented to receiving cell phone calls by providing cell numbers to defendant); Saunders v. NCO Fin. Sys., 2012 WL 6644278, *3 (E.D.N.Y. Dec. 19, 2012) (in a debt collection case under FDCPA and TCPA, plaintiff conceded that he had consented to the calls because the court noted, "authorities are almost unanimous that voluntarily furnishing a cell phone number to a vendor or other contractual counterparty constitutes express consent"); Pinkard v. Wal-Mart Stores, Inc., 2012 WL 5511039, *5-6 (N.D. Ala. Nov. 9, 2012) (voluntary provision of cell phone number is an invitation to be called); Ibey v. Taco Bell Corp., 2012 WL 2401972, *3 (S.D. Cal. June 8, 2012) (because plaintiff initially texted Defendant, a later text confirming that plaintiff no longer wanted to receive text messages did not violate TCPA);Ryabyschuck v. Citibank, 2012 WL 5379143, *3 (S.D. Cal. Oct. 13, 2012) (providing cell number without caveat was some measure of prior consent);Greene v. DirecTV, Inc., 2010 WL 4628734, *3 (N.D. Ill. Nov. 8, 2010) (plaintiff consented to fraud alert calls by releasing cell number as the chosen manner to be reached).

Other courts however, have not followed the FCC’s guidance for a variety of reasons.  See, Edeh v. Midland Credit Management, Inc., 748 F.Supp.2d 1030, 1038 (D. Minn. 2010) (In an action brought under FDCPA and TCPA, the Court held that "express" means "explicit" and not "implicit" consent; debt collector was not permitted to make an automated call unless plaintiff "had previously said something like this: 'I give you permission to use an automatic telephone dialing system to call my cellular phone.'"); Leckler v. Cashcall, 554 F.Supp.2d 1025 (N.D. Cal. 2008) (court found that the FCC's guidance permitted "implied" consent which is "manifestly contrary to the plain language of the statute,” unreasonable, and not entitled to deference), vacated for lack of subject matter jurisdiction and dismissed, 2008 WL 5000528; Travel Travel Kirkwood, Inc. v. Jen N.Y., Inc., 206 S.W.3d 387, 392 (Mo. Ct. App. 2006) ("If consent is not manifested by explicit and direct words, but rather is gathered only by implication or necessary deduction from the circumstances, the general language, or the conduct of the parties, it is not express consent. Rather, it is merely implied consent.").

Like many of these cases, the issues in Mais included whether providing a cell number to a creditor was express or implied consent to be called and, whether courts are required to follow FCC rule making authority on the issue, or whether they are free to reach a different conclusion.

In Mais, Plaintiff sought treatment at a hospital emergency room in Florida.  Plaintiff’s wife completed and signed the admission documents.  In those documents, she provided insurance information, and Plaintiff’s cell phone number.  She also acknowledged that receipt of the hospital’s privacy policies, and expressly agreed that Plaintiff’s healthcare information may be released for “purposes of treatment, payment or healthcare questions,” including payment and benefit questions.  Plaintiff was admitted to the hospital, and Florida United Radiology provided services to Plaintiff.  Later, a billing dispute arose with Florida United and Gulf Coast, a third party debt collection service, began collection efforts.  Gulf Coast began calling Plaintiff’s cell phone with an auto dialer between 10 and 30 times, and made similar calls to other putative class members.

Based on these facts, the District Court held that Plaintiff had not provided “prior express consent” to receive debt collection calls to his cell phone.  The District Court held that compliance with HIPAA did not automatically ensure compliance with the TCPA, and that the FCC’s interpretation of “prior express consent” was not entitled to deference because it conflicts with the clear meaning of the TCPA.  See Chevron, U.S. A., Inc. v. Natural Res. Def. Council, Inc., 467 US. 837, 843 n. 9 (1984) (“The judiciary is the final authority on issues of statutory construction and must reject administrative constructions which are contrary to clear congressional intent.”)  On the latter point, the District Court concluded that providing a cell number was at best “implied” consent, not the required “express” consent.  Moreover, the District Court concluded that the FCC interpretation did not apply because Plaintiff did not provide the cell number to the bill collector.  The District Court further held that the medical providers could not be held vicariously liable under the TCPA for Gulf Coast’s collection calls.

The Eleventh Circuit Court of Appeals disagreed with the District Court’s holdings on nearly every point.  Most importantly, the Court held that the District Court exceeded its jurisdiction by holding that the 2008 FCC ruling was inconsistent with the TCPA.  Under Section 402(a) of the Communications Act, any proceeding “to enjoin, set aside, annul, or suspend any order of the Commission” must be brought under the Hobbs Act.  The Hobbs Act grants exclusive jurisdiction for these issues to the Federal Courts of Appeal.  28 U.S.C. § 2342; see also, FCC v. ITT World Comm’ns, Inc., 466 U.S. 463, 468 (1984) (Exclusive jurisdiction for review of final FCC orders lies in the Federal Court of Appeals).  The Court also rejected Plaintiff’s argument that he did not provide the cell phone number to Florida United or its collection agent Gulf Coast, and that the terms “health information” as used in the hospital admission forms did not include his cell phone number.  In closing, the Court noted, “Ultimately, by granting the Hospital permission to pass his health information to Florida United for billing, Mais’s wife provided his cell phone number to the creditor, consistent with the meaning of prior express consent announced by the FCC in its 2008 Ruling.  Gulf Coast is entitled to summary judgment precisely because the calls to Mais fell within the TCPA prior express consent exception as interpreted by the FCC.  Under the Hobbs Act, the district court lacked jurisdiction to review the Commission’s interpretation.”

The Eleventh Circuit decision in Mais v. Gulf Coast is good news, but cannot universally solve all issues of prior consent for many businesses due to jurisdictional issues, the future creative impulses of opportunistic plaintiffs’ attorneys, and the factual nuances and complexity in proving consent that likely arises in each new situation.  It would be premature to forecast that Mais will not put an end to the scourge of these cases.  The economics of proving that an enormous number of calls were made only after the customer gave prior express consent by providing their cell number (or otherwise) can lead to rational business decisions to settle rather than litigate to victory.  Given the exposure, some businesses might elect to make all calls to residential lines, or to obtain actual written consent to call or text cell phones.  In the end, the surest way to eliminate this type of litigation risk and ambiguity is for Congress to pass legislation recognizing that cell phones are the most common form of communication in today’s market place, and that this is the consuming public’s preference.  After all, the TCPA was first enacted over 20 years ago.  Today, the notion that a business call to a cell phone significantly increases the cost to a consumer seems outdated.

Finally, valid questions remain about the true impact of the Court’s holding inMais.  Is the holding limited to medical bill collection efforts where HIPAA applies?  Will other courts disagree with the Mais court’s conclusion that a lower court lacks jurisdiction to address the FCC 2008 ruling on prior express consent?  And, what if the cell number is provided by someone other than the recipient of the call at issue or as part of a separate or different transaction?  See, Osorio v. State Farm Bank, 746 F.3d 1242 (11th Cir. 2014) (Under TCPA, auto dialed and pre-recorded debt collection calls may only be placed to the subscriber of the cell phone being called because live in girlfriend did not have authority to consent to credit card collection calls to boyfriend’s cell phone.)