United States: The Do’s and Don’ts of TCPA Lawsuit Defense

Last Updated: July 31 2015
Practice Guide by Klein Moynihan Turco LLP

The number of Telephone Consumer Protection Act (“TCPA”) lawsuits has grown significantly in recent years, with several thousand cases filed annually.  Any business that contacts customers or potential customers via telephone, text or facsimile, or engages a third party to do so on its behalf, is almost certainly on the radar screen of TCPA class action law firms.  The steps that such businesses take now may well prevent them from getting named in a TCPA case.  Alternatively, if named, having taken proactive steps well in advance of suit will maximize their prospects of achieving a positive outcome.

What is the TCPA?

The TCPA was enacted in 1991 and, with some exceptions, allows individuals to file lawsuits (including class actions) to collect damages based upon receipt of certain telemarketing calls, including pre-recorded and/or autodialed telephone calls, (SMS) text messages and faxes.    

The TCPA allows for actual damages, or statutory damages ranging from $500 to $1,500, per unsolicited call, text message or fax.  In light of its exacting standards and exceedingly high statutory penalties, the TCPA remains the subject of one of the most active areas of class action litigation in the country.  The October 16, 2013 amendments, together with the recent, overly-expansive interpretation of the TCPA by the Federal Communications Commission (“FCC”), have further motivated TCPA class action plaintiffs.  The following is a list of “do’s” and “don’ts” to help businesses succeed in – or better yet, avoid – a TCPA lawsuit.

TCPA Class Action Lawsuit Defense: A Primer

DO’S

  1. DO work with experienced TCPA counsel before beginning a marketing campaign.  A penny of prevention is worth a pound of cure.  No doubt, many companies and individuals that have been hit with multi-million dollar TCPA lawsuits in the past few years would eagerly go back in time and spend a few hours each month working with experienced TCPA counsel.   

  2. DO follow the regulations closely.  TCPA lawsuits are preventable.  There are some bright-line rules that must be followed, while other provisions are more nuanced.  Many marketers mistakenly believe common sense will be enough to comply with the TCPA.  However, TCPA compliance requires knowledge of the statute itself, as well as developing case law and FCC declaratory rulings.   Mere technical non-compliance with the TCPA alone has resulted in multi-million dollar judgments against, and settlements by, many companies. 

  3. DO choose your marketing partners carefully.  Advertisers that allow third parties to place telemarketing calls or send texts or faxes on their behalf stand a substantial chance of being held liable for violations of the TCPA.  Also, it is critical that businesses be sure the leads they receive are 100% valid and that their lead generator partners can demonstrate that they received express written consent to place the call(s) at issue.

  4. DO have strong indemnity agreements in place.  Because sellers can never know with 100% certainty how their third-party marketing partners or lead generators will conduct their respective businesses, it is critical to have ironclad indemnity provisions in place.  This is not a failsafe.  However, it is certainly better to have this potential pool of defense funds available than to not have it. 

  5. DO protect the business’ officers, directors and employees.  Individuals are potentially liable for TCPA violations, even when a lawful corporate structure is in place.  This can be financially devastating to the affected individuals.  Having strong policies and procedures in place to prevent TCPA violations, and being able to demonstrate that the individuals at risk worked with counsel to prevent violations, is critical.  In addition, having proper insurance coverage in place, both for the company and for acts/omissions of the individuals, is key.  

DON’TS

  1. DON’T panic if named in a TCPA lawsuit.  There are many potential defenses to a TCPA action.  Experienced TCPA counsel should be able to identify and assert all available defenses.  Better yet, a business that has been working with TCPA compliance counsel may be in a much better position to have the case dismissed altogether when its lawful practices are demonstrated to plaintiff’s counsel.

  2. DON’T rely on the current case law as dispositive.  Case law relating to the TCPA is being supplemented and molded on an almost daily basis.  For example, many courts are questioning whether the FCC’s overly broad definition of autodialer comports with common sense or the intent and clear wording of the statute. 

  3. DON’T speak directly with the adversary.  Relying upon the honor and good faith of a law firm that is suing you is a very poor strategy.   Business practices that appear to be proper, and that peers engage in, may in fact be the basis of the plaintiff’s claim.  Discussing these business practices with an adversary may simply confirm the plaintiff’s case and serve as a clear admission of wrongdoing. 

  4. DON’T issue a press release.   Not only may public declarations of innocence highlight business practices that may be at issue, press releases may also bring additional class action law firms forward in a race to the courthouse.  This may simply compound the difficulty of obtaining dismissal and increase litigation costs significantly.  

  5. DON’T speak with employees, marketing partners, advertisers or other industry contacts until after speaking with an experienced attorney.  Information discussed or shared with any of the above may be discoverable by plaintiff and may ultimately harm the defense.  Moreover, upon learning of the case filing or potential filing, some of the above individuals and/or entities may have incentive to work with the plaintiff to avoid being named as a party. 

  6. DON’T create/destroy documents.   Document tampering or spoliation will generally be uncovered during the discovery portion of the action.  Such activities may create a basis for sanctions or even lead the court to strike critical defenses that would have been otherwise available.  

The Real Way to Win A TCPA Case - Avoid Being Named Altogether

Of course, the surest way to succeed in any TCPA action or regulatory investigation is obviously to never appear on the radar screen in the first place.  Sellers and telemarketers not currently working with experienced telemarketing and Internet marketing counsel versed in the intricacies and nuances of the TCPA are almost certainly at risk.  Moreover, in-house and other corporate counsel should honestly assess how familiar they are with the intricacies and nuances of the TCPA and whether consulting with counsel experienced in TCPA compliance best serves and protects their clients’ interests.  Proper compliance is the only sure-fire way to succeed in a TCPA lawsuit.

This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. If you have any specific questions on any legal matter, you should consult a professional legal services provider.

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