Compliance & Ethics ACC LQH: The Telephone Consumer Protection Act (TCPA): A Map for the Liability Minefield May 17, 2016 Douglas G. Bonner Attorney Womble Carlyle Sandridge & Rice Andrea T. Shandell Associate General Counsel & Chief Ethics Officer Gannett Co., Inc.
Outline I. TCPA Litigation Climate: Latest Trends in TCPA Litigation A. Class action activity; settlements; limited defenses to strict liability statute B. Overview of what the TCPA and FCC Rules cover (some recent case examples) C. 2015 FCC Declaratory Ruling increases compliance burdens / D.C. Circuit review ATDS definition; called party defined; reassigned numbers D. Article III standing E. Vicarious liability/insurance coverage for TCPA risks II. III. Best Practices for minimizing TCPA liability risk TCPA Quiz Dos and Don ts 2
TCPA Litigation Climate TCPA is STILL a favorite vehicle of the plaintiffs bar: 2000 suits filed in 2014. Calls, Faxes or Texts. Donald J. Trump for President Campaign sued in late April 2016 in two class actions in for non-telemarketing texts to cell phones w/o prior written express consent. (N.D. Illinois) Ø Reply YES to subscribe to Donald J. Trump for President. Your subscription will help Make America Great Again! Msg&data rates may apply. Substantial, high-profile settlements: Ø $18 Million Portfolio Recovery Associates, LLC proposed class action settlement (S.D. Cal., April 2016)(settlement notices to 7.4 million consumers who received ATDS calls to cell phones) Ø $75.5 Million class settlement Capital One (approved 7/29/14). Strict liability statute: Uncapped aggregate damages ($500 negligent / $1500 willful violation)), though settlements are quite less than the potential recovery. 3
Limited defenses to TCPA law suits Broad definition of ATDS: even when ATDS is not operational to store or produce random or sequential numbers and to dial them only way to avoid litigation exposure: (a) don t call; or (b) use a rotary phone. Shell game of what number is a wireless number: constant scrubbing and obtaining prior express written consent. (An estimated 100K numbers change hands every day). Prior express consent is fact-dependent ; revocation is easy. Limited exemptions for emergency calls, health care messages by a covered entity or business associate, and robocalls made solely to collect a debt owed to or guaranteed by the United States. Even a Rule 68 offer of full relief to the class action plaintiff will not moot a TCPA class action for Art III standing. A plaintiff s individual TCPA claims are not moot if full relief is tendered and the proceeds are held in escrow by the court. Chen v. Allstate Ins. Co. (9 th Cir. 2016) 4
Recent 2013-14 Class Action Settlements Alleged Robocalls/Text Msgs Papa John s $16.5M Steve Madden $10M Domino s Pizza $9.75M Chase Bank USA $34M Bank of America $32M Discover Financial $8.7M 5
What the FCC TCPA Rules Cover Telemarketing via phone calls and text messages CAUTION DEBT COLLECTORS!: Autodialed/Prerecorded calls to wireless numbers Jefferson v. GM Financial Company (D. N.J.) (4/26/16) Husband brings class action suit for debt collection calls made to his cell phone to collect his wife s car loan debt. ATDS allegations on information and belief. Use of Autodialers or Automated Telephone Dialing Systems ( ATDS ) or prerecorded voice calls Duguid v. Facebook, Inc. (N.D. Cal.) (texts for login notifications dismissed because failed to alleged texts were made by an ATDS using a random or sequential number generator) (3/24/16) Do-Not-Call Registries (National DNC Registry + Company-Specific) Junk Faxes Old telephone technology but still used for marketing and covered by the TCPA. In 2014, FCC granted retroactive waivers from optout notice requirement for solicited faxes, i.e. if sent with prior express permission of recipient. Indicated it would consider similar waiver requests from similarly situated parties. FCC C&GA Bureau seeking public comment on 5 more retroactive waiver petitions (May, 2016). 6
PRIOR CONSENTS REQUIRED for autodialed / pre-recorded calls Telemarketing Call or Text Wireless/Cell Written consent Residential/Landline Written Consent (for pre-recorded/ artificial voice calls only) Informational Call or Text Wireless/Cell Consent Residential/Landline Not Required 7
FCC 2015 Declaratory Ruling Expands Definition of ATDS FCC interprets ATDS as: any dialing equipment that has the capacity to store, or produce and dial, random or sequential numbers whether or not the equipment is used for that purpose. What does this mean? A rotary phone would be the only equipment excluded from commercial calls to a wireless number even when reaching out to existing customers! Declaratory Ruling and Order (7/10/15); petition for review, ACA International (ABA; Consumer Banking Ass n.; DMA) (D.C. Cir.) Final briefs filed 2/24/16. Oral argument unscheduled. 8
If called party is not the intended recipient tough! Recycled wireless numbers - Called party as used in the TCPA, is the actual subscriber or a customary user of that number (i.e. family member) in confirming validity of consent. What if roommate answers? Leyse v. Bank of America NA (3 rd Cir., Oct. 2015)(plaintiff may sue for autodialed call to residential line intended for roommate subscriber under zone of interests test; 3 rd Cir. vacated dismissal, but consent of called party is a defense that should shield Bank of America from liability) FCC rejected proposals that called party be interpreted as intended recipient. FCC holds callers have constructive notice of reassignment 1 free call. Beyond that, liability attaches. ATTENTION ALL HANDS! Consent can be revoked by any reasonable means (including verbal request). Can a listed business number that is also a residential line be subject to the TCPA protections for telemarketing to a residential number? Todd C. Bank, plaintiff s attorney, filed FCC petition for declaratory ruling after Second Circuit stayed his appeal following dismissal of his S.D.N.Y. class action suit. Comments filed 5/2/16; Reply Comments 5/17/16. (CG Docket No. 02-278). 9
Does TCPA Plaintiff have actual harm for Art. III standing to bring suit for violation of a federal statute? Spokeo, Inc. v. Robins, No. 13-1339 (S. Ct.) Petition for Cert. Granted from 9 th Circuit. Argued 11/2/15. But alleged telephone charges, reduced cell plan time and invasion of privacy are concrete enough to confer standing in TCPA action. Henderson v. United Student Aid Funds, Inc., No. 13-CV-1845 (S.D. Cal.)(Order Denying Motion to Stay Action at 9)(5/3/16) 10
Outsourcing telemarketing/debt collection: caveat emptor FCC: traditional common law principles of agency apply for principal to be liable for TCPA violations by call center agent (DISH Networks Declaratory Ruling) Commercial liability, D&O, privacy & data security insurance policy coverage Available? (Lloyds of London?) Exclusions? (TCPA, DoNotCall, Violation of Statutes) 11
BEST PRACTICES: UNDERSTANDING THE RISKS
Best Practices Identify TCPA consent required Require TCPA compliance by company supplying calling lists Prior express consent received from actual subscriber, and recorded. Identify all wireless/recycled wireless numbers! Must scrub for wireless numbers if doing automated/prerecorded calling! Monitor national DNC registry scrub call list monthly against national DNC registry AND maintain records! Comply with DNC Policy (and provide to consumers on request), including maintaining company-specific DNC registry Train/supervise employees 13
TOP TWELVE TCPA DOs and DON Ts FOR BUSINESS DOING OUTBOUND AUTOMATED OR PRERECORDED CALLING (The following is not intended as nor should be considered legal advice, and you should consult an attorney for specific legal advice involving your particular business practices.)
Maintain an up-to-date, companyspecific, written Do-Not-Call Policy to be produced on-demand? Do Don t
Need to know the different requirements applicable to autodialed and prerecorded calls to wireless numbers and residential landlines, identify wireless numbers, and ensure compliant call handling before dialing? Do Don t
Treat autodialed texts the same as any autodialed call to a wireless number? Do Don t
Keep records of prior express written consent to receive autodialed calls or texts, or prerecorded calls, with name and associated telephone number of consenting party, and consent language? Do Don t
Incorporate prior express written consent language to receive telemarketing calls and texts in your standard contract for services? Do Don t
Scrub your call list at least monthly against the National Do-Not-Call Registry? Do Don t
Maintain a current Company-specific Do-Not-Call List? Do Don t
Place a telemarketing call to someone on a Do-Not-Call list who contacts a customer service center and requests a call back? Do Don t
Discontinue placing calls to a requesting party no later than 30 days after receiving a Do-Not-Call Request? Do Don t
Okay to place autodialed or prerecorded debt collection calls to someone who leaves their cell phone number on an application for service or an admission form? Do Don t
Avoid calls to reassigned wireless numbers once reassigned even if intending to call the person to whom it was once assigned? Do Don t
Know whether your dialing equipment has the capacity to store or produce numbers using a random or sequential number generator and to dial those numbers, even if capacity isn t utilized? Do Don t
BONUS vicarious liability points: Manage your risk by outsourcing outbound telemarketing to an outside vendor and lead generator who guarantees TCPA compliance, works on a commission for sales basis, and will agree to indemnify for losses? Do Don t
Questions and Answers Thank You Douglas G. Bonner Womble Carlyle 1200 Nineteenth Street NW, Suite 500 Washington, DC 20036 202.857.4428 DBonner@wcsr.com Andrea T. Shandell Associate General Counsel & Chief Ethics Officer Gannett Co., Inc. Office: 703.854.6939 28