United States: Litigation Alert: The Ninth Circuit Holds That A Telephone Consumer Protection Act Violation Alone Is Sufficient To Establish Standing

This week, the U.S. Court of Appeals for the Ninth Circuit held that allegations that unsolicited advertisement text messages were sent in violation of the Telephone Consumer Protection Act (TCPA) established a concrete injury sufficient to confer Article III standing in Van Patten v. Vertical Fitness Group, LLC, No. 14-55980 (9th Cir. Jan. 30, 2017).

The Telephone Consumer Protection Act

The TCPA of 1991 makes it "unlawful... to use any telephone facsimile machine, computer, or other device to send, to a telephone, facsimile machine, an unsolicited advertisement... . " 47 U.S.C. § 227(b)(1)(C). The TCPA generally prohibits making nonemergency, unsolicited calls advertising "property, goods, or services" using automatic dialing systems and prerecorded messages to telephones and cellular phones. Id., at § 227(a)(5).  The Federal Communications Commission (FCC) has interpreted the TCPA's restriction to apply to both "voice calls and text calls to wireless numbers," including text messages. In re Rule & Regulations Implementing the Telephone Consumer Protection Act, 18  F.C.C. Rcd. 14014, 14115 (July 3, 2003). A call or text is not unsolicited if the recipient provided the sender "prior express consent." 47 U.S.C. § 227(b)(1)(A).

Background

On May 21, 2009, Bradley Van Patten visited a Gold's Gym in Green Bay, Wisconsin and signed a membership agreement, providing his cell phone number as his contact number.  Three days later, Van Patten called Gold's Gym and cancelled his membership. Van Patten later moved to California but kept his Wisconsin cell phone number.

In 2012, the gym's franchise with Gold Gym's ended and the location became an "Xperience Fitness" gym, which was owned by Vertical Fitness Group, LLC. After the brand change, Vertical Fitness turned to its marketing partner, Advecor, Inc., to help publicize the change and invite current and former members to return. Advecor sent text messages on Vertical Fitness' behalf to former members' cell phone numbers provided by Vertical Fitness. Van Patten received two text messages on May 14 and June 25, 2012, informing him that Gold's Gym was now Xperience Fitness and inviting him to resume his membership.

On June 28, 2012, Van Patten filed a putative class action against Vertical Fitness and Advecor, alleging that the unauthorized text messages "caused consumer actual harm," including "the aggravation that necessarily accompanies wireless spam" and that consumers "pay their cell phone service providers for the receipt of such wireless spam." Van Patten asserted violations of the TCPA and the California Business and Professions Code. The district court granted summary judgment in favor of the defendants on all of Van Patten's claims.

Ninth Circuit Decision

Although it found that Van Patten had standing to bring his lawsuit, the Ninth Circuit affirmed the district court's granting of summary judgment in Van Patten v. Vertical Fitness Group, LLC, No. 14-55980 (9th Cir. Jan. 30, 2017), concluding that Van Patten had provided his prior express consent to receive advertisement text messages and had not effectively revoked it.

Citing Spokeo v. Robins, 136 S. Ct. 1540, 1549 (2016), the Ninth Circuit noted that plaintiffs must allege a concrete injury, which may be intangible, even in the context of a statutory violation and not simply a "bare procedural violation." Vertical Fitness, No. 14-55980, at 9. In determining whether an intangible injury is concrete, the court explained that "Congress is well positioned to identify intangible harms that meet minimum Article III requirements." Id. (quotation omitted). Moreover, even if an injury was "previously inadequate at law," Congress may elevate it "to the status of [a] legally cognizable injur[y]." Id., at 10.  (quotation omitted).

The Ninth Circuit found that, in enacting the TCPA, Congress had established "the substantive right to be free from certain types of phone calls and texts absent consumer consent" and "identified unsolicited contact as a concrete harm," giving consumers a means to redress that harm.  In support of its position that a violation of the TCPA constituted a concrete, de facto injury, the court observed that most states recognized a right of privacy and American courts had long possessed causes of action for invasion of privacy, intrusion upon seclusion and nuisance. See id. at 9. Distinguishing the present case from Spokeo "where [the] violation of a procedural requirement minimizing reporting inaccuracy may not cause actual harm or present any material risk of harm," the Ninth Circuit found that "the telemarketing text messages at issue here, absent consent, present the precise harm and infringe the same privacy interests Congress sought to protect in enacting the TCPA." Thus, the court found that "[a] plaintiff alleging a violation under the TCPA 'need not allege any additional harm beyond the one Congress has identified.'" Id., at 10-11.

The Ninth Circuit then turned to whether the plaintiff had given his prior express consent to receive the advertising text messages. Finding that "the scope of a consumer's consent to being contacted depends on the transactional context in which it is given," the court held that, by providing his cell phone number for the purposes of his gym membership agreement, the plaintiff had given his consent to being contacted for related matters, such as an invitation to return and reactivate his gym membership, but not to all communications. Id., at 2, 16-17.

The Ninth Circuit next addressed whether the plaintiff revoked his consent when he cancelled his gym membership. Concluding that "the TCPA permits consumers to revoke their prior express consent to be contacted by telephone autodialing systems," but that "[r]evocation of consent must be clearly made and express a desire not to be called or texted," the court held that "because [plaintiff] did not clearly express his desire not to receive further text messages, he did not revoke his consent." Id., at 20. 

Finally, the Ninth Circuit analyzed the plaintiff's claims under the California Business and Professions Code. The court found that, under California law, the standing requirements for bringing an action for violations of California unfair competition and/or false advertising laws require plaintiffs to demonstrate an economic injury (i.e., a loss or deprivation of money or property sufficient to constitute an injury in fact) caused by the violations.  See id. at 21.  Examining the plaintiff's allegations, the Ninth Circuit found that the plaintiff could not prove that the advertisement text messages had caused him to suffer any economic injury. See id

Takeaways

Vertical Fitness has significant implications for cases involving violations of the TCPA, and, potentially, other Congressional statutes that establish a right of privacy and provide a private right of action. Along with the its recent decision in Syed v. M-I, LLC, No. 14-17186 (9th Cir. Jan. 20, 2017) where a plaintiff alleging a violation of his privacy rights under the Fair Credit Reporting Act was found to possess standing based solely upon that violation, the Ninth Circuit has recognized Article III standing for violations of substantive protections created by federal privacy statutes, even in the absence of economic or personal injury. Where a plaintiff alleges violation of the very rights created by the statute—in this case, the right to be free from the intrusion of unconsented calls on a mobile phone, the Ninth Circuit has held that the plaintiff has alleged an injury-in-fact sufficient to satisfy Article III.  ​

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