United States: Recent Appellate Decisions Clarify Meaning of "Called Party" in the TCPA

The Telephone Consumer Protection Act (TCPA) prohibits certain calls made to mobile phones using automated telephone dialing systems.1 However, companies are permitted to place automated calls to cellular phones if they have the "prior express consent of the called party."2 Unfortunately, the TCPA does not define the term "called party," and recent decisions have broadened the term in ways that present potential dangers for companies using automated telephone campaigns. The Eleventh Circuit's recent decision in Breslow v. Wells Fargo Corp.3 adds to this growing body of law.

Although the term "called party" appears clear at first, certain circumstances can muddy the water. For example: A phone number may be reassigned to a new user between the time that the original owner gives consent and the time that the potentially problematic call is placed. Or, the phone number may belong to the same person who gave consent, but a different person may answer the call. Or, the person giving consent may never have owned the cell phone number at all, but rather have given the number through mistake or intentionally trying to mislead the company. The problem in each case is clear: callers will be trying to reach the person who gave consent, but someone else will answer the phone, and it is unclear whether the "called party" is the intended recipient or the actual recipient of the call.

In Breslow, the Eleventh Circuit confronted one such situation, as Wells Fargo used an automated system in an attempt to contact a delinquent account holder's specified telephone number. However, that number had been re-assigned to a different person, Ms. Breslow.4 Based on this call, Ms. Breslow brought suit under the TCPA on her own behalf and on behalf of her minor child, who was the primary user of the phone. The Eleventh Circuit affirmed a district court's entry of summary judgment in favor of Ms. Breslow, concluding that the former owner's consent was irrelevant because, according to the court, the term "called party" "means the subscriber to the cell phone service or user of the cell phone called."5

The Breslow decision is just one of a growing body of cases raising concerns for users of automated calling systems. In Soppet v. Enhanced Recovery Company, LLC,6 the Seventh Circuit also addressed a TCPA claim involving the transfer of a phone number to a new owner after consent was given by the prior owner. The Soppet court reached the same result as Breslow, while also commenting that its reasoning would apply to circumstances where consent is given by someone who does not own the phone.7

Less than three months before Breslow, the Eleventh Circuit issued its decision in Osorio v. State Farm F.S.B.,8 addressing a similar TCPA claim. In Osorio, Clara Betancourt gave State Farm consent to place automated calls to her.9 Unbeknownst to State Farm, however, Ms. Betancourt provided them with the phone number of Fredy Osorio, her domestic partner.10 When Ms. Betancourt did not pay her debt to State Farm, State Farm placed an automated call to Mr. Osorio's number.11 The Eleventh Circuit reversed the district court's dismissal of the case, concluding that Ms. Betancourt's consent was only sufficient if she provided it as an agent of Mr. Osorio.12 In the absence of an agency relationship, the court concluded, the consent was invalid.13

Decisions such as Breslow, Osorio and Soppet raise significant potential problems for companies engaging in automated telephone campaigns. There is no easy way to identify if or when the owner of a phone number has changed, and without this information, the caller has no way of knowing when any automated call to a cellular phone will violate the TCPA. In Soppet, the Seventh Circuit suggested that, to avoid liability, a caller should dial its first call to a number manually.14 But, of course, this does not eliminate the possibility that a phone number's owner changes between any subsequent calls.

The TCPA's $500 statutory damages provision compounds the risk that potential TCPA violations pose. A primary reason that TCPA cases continue to grow in number (and that we continue to discuss the statute on our Class Defense blog) is that, when brought as a class action, a TCPA suit has the potential to impose massive aggregate liability. Companies often use automated calling campaigns to reach thousands, or even millions, of customers, and each one of those calls carries potential liability of $500 or more if it violates the TCPA. Given this fact, it is not surprising that TCPA class actions are almost universally resolved via a successful motion to dismiss, or settlement. In addition, as we have noted before, companies are often asking the Federal Communications Commission to exempt certain practices from TCPA liability.

While technology such as automated telephone dialing systems often provides companies an opportunity to be more efficient and cut costs, cases like Breslow show that there are serious litigation risks as well. With statutes such as the TCPA growing in popularity with class action lawyers, companies must remain vigilant regarding changes in the law. Where judicial decisions interpret consumer protection statutes broadly, as Breslow does with the TCPA, companies should continue to evaluate the costs and benefits associated with their business practices, including the use of automated dialing technology.

We wish to thank Mayer Brown summer associate Justin Dickerson for his contribution on this article.

Endnotes:

1 47 U.S.C. § 227(b)(1)(A)(iii).
2 Id. § 227(b)(1)(A).
3 2014 WL 2565984 (11th Cir. June 9, 2014)
4 Id. at *1.
5  Id.
6 679 F.3d 637 (7th Cir. 2012)
7 Id. at 641.
8 746 F.3d 1242 (11th Cir. 2014).
9 Id. at 1247.
10 Id.
11 Id. at 1248.
12 Id. at 1251-52.
13 Id. at 1253-54.
14 See Soppet, 679 F.3d at 642.

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