This article first appeared in Cyberlaw Currents, a Frankfurt Kurnit legal blog.
On October 17, 2012, the Ninth Circuit Court of Appeals ruled against Best Buy Stores, L.P. ("Best Buy") in the class action suit Chesbro v. Best Buy Stores, L.P., No. 11-35784 (9th Cir. Oct. 17, 2012). Reversing the district court's grant of summary judgment in favor of Best Buy, the Ninth Circuit held that the electronics chain's automated calling practices associated with its "Reward Zone Program" violated the Telephone Consumer Protection Act of 1991 ("TCPA") and its state analogue the Washington Automatic Dialing and Announcing Device Act ("WADAD"). At issue were Best Buy's automated calls, which urged listeners to "redeem" their Reward Zone points, directed them to the Reward Zone website, and thanked them for shopping at Best Buy. Significantly, the redemption of Reward Zone points required going to a Best Buy store and making further purchases of Best Buy's goods. According to the Court, there was no other use for Reward Zone points, and therefore the Court rejected Best Buy's argument that the calls were purely informational courtesy calls to Reward Zone members, and instead found that the fundamental purpose of the calls was to encourage listeners to make future purchases at Best Buy.
The TCPA forbids marketers from making automated commercial calls (robocalls) to consumers without their prior express consent. Although the statute exempts calls for emergency purposes and allows the Federal Communications Commission ("FCC") to exempt non-commercial calls, the Court held that Best Buy's calls did not fit within an exemption. The FCC exempts calls that (1) do not adversely affect the recipient's privacy rights and (2) do not "include or introduce an unsolicited advertisement or constitute a telephone solicitation."
Despite Best Buy's argument that its calls were purely informational and related to the Reward Zone Program rather than any specific product or sale, the Court held that "[n]either the [TCPA] statute nor the [implementing] regulations require an explicit mention of a good, product, or service where the implication [that the call is an advertisement] is clear from the context." The Court applied the same reasoning to the WADAD allegation and found a violation of that state statute as well. Because the plaintiff "repeatedly and expressly asked not to be contacted," the Court rejected Best Buy's arguments that the communications were not unsolicited or that the plaintiff consented to the program when he purchased a computer from the store.
This case serves as a reminder that advertisers must abide by both state and federal laws regulating telemarketing activities.
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