United States: Monthly TCPA Digest - August 2018

We are pleased to present the latest edition of our Monthly TCPA Digest, providing insights and news related to the Telephone Consumer Protection Act (TCPA).

This issue provides insurance information for companies facing TCPA lawsuits and identifies the types of policies and provisions that may offer coverage. You will also find an update on the status of the proposed reassigned numbers database as well as information about a new FCC Public Notice, released August 10. Comments on the Public Notice are expected to lay the groundwork for the FCC's next major action on call blocking and methods to eliminate illegal robocalls.

If you have suggestions for topics you'd like us to feature in this newsletter, or any questions about the content in this issue, please feel free to reach out to an attorney on Mintz Levin's TCPA and Consumer Calling Practice Team. You can click here to subscribe to the Monthly TCPA Digest.

In This Edition

Part I – TCPA: Regulatory Update
Reassigned Numbers Database Finds Bipartisan Support from Senators
FCC Seeks Comment on Additional Call Blocking Methods
Petitions on Public Notice
Part II – TCPA: Litigation Update
Insurance Coverage May Be Available to Some Policyholders for TCPA Lawsuits

PART I – TCPA: REGULATORY UPDATE

Reassigned Numbers Database Finds Bipartisan Support from Senators

By Russell Fox, Radhika Bhat, and Elana R. Safner

On July 19, Senate Commerce Committee Chairman John Thune (R-SD) and Senator Ed Markey (D-MA) sent FCC Chairman Ajit Pai a letter commending the FCC for releasing its Second Further Notice of Proposed Rulemaking (discussed in our April Monthly TCPA Digest), which proposes to reduce unwanted robocalls and robotexts by creating a reassigned numbers database. In the bipartisan letter, the Senators encouraged the FCC to move forward with the creation of a reassigned numbers database and asked the FCC to prioritize considerations of comprehensiveness, accuracy, security, efficiency, and the creation of a reasonable safe harbor. The Senators believe a safe harbor would be appropriate if the caller "took all reasonable steps to properly use a reassigned numbers database," made the call or text in reliance on incorrect information in the database, had the consent of the original called party, and subsequently reported the inaccuracy.

Although many industry commenters favored the creation of a reassigned numbers database accompanied by a safe harbor from liability, some were less enthusiastic. Those parties expressed concerns about the potentially substantial costs to create and maintain such a database, which would likely fall on business callers, and with uncertain benefits.

Multiple parties used a related proceeding to contribute additional comments on the reassigned numbers database. On June 20, the FCC's Consumer and Government Affairs Bureau ("Bureau") released a Public Notice soliciting input for a staff report on robocalling. The FCC received approximately thirty substantive comments (the reply comment deadline is August 20). In the Public Notice, the FCC sought comment on a variety of topics related to illegal robocalls, including the effects of current initiatives such as SHAKEN/STIR to combat caller ID spoofing; data on notable trends in illegal robocalling; enforcement efforts; and remaining challenges. Several major trade associations and service providers filed comments in this proceeding endorsing market solutions to prevent robocalls to reassigned numbers, rather than the creation of a new database.

Also in response to the Public Notice, many commenters expressed support for industry efforts to implement the SHAKEN/STIR framework, a set of cryptographic protocols and operational procedures to authenticate calls and reduce illegal spoofing. Many also praised the FCC's 2017
Call Blocking Report and Order and Further Notice
, which empowered providers to block calls that illegally spoofed some categories of telephone numbers, such as invalid numbers and numbers subject to a do-not-originate request.

FCC Seeks Comment on Additional Call Blocking Methods

On August 10, the Consumer and Government Affairs Bureau released a Public Notice seeking to refresh the record on advanced methods to target and eliminate unlawful robocalls. With this Public Notice, the FCC aims to build upon its inquiry into provider-initiated call blocking, which it began in the March 2017 Call Blocking Notice of Proposed Rulemaking and Notice of Inquiry and which led to new rules in November 2017 expressly authorizing providers to block clearly defined categories of calls highly likely to be illegal. The FCC now aims to "identify specific, enforceable criteria for targeting illegal calls that cannot be abused, while ensuring providers have sufficient flexibility available to adapt to dynamic calling patterns."

The FCC poses several questions, including:

  • whether providers can reliably identify calls that are highly likely to be illegal beyond those calls the FCC approved for blocking in the Call Blocking Report and Order and Further Notice;
  • whether and how providers could use specific criteria to prevent illegal calls from reaching consumers;
  • what the FCC can do to facilitate call traceback efforts and how SHAKEN/STIR will affect call traceback; and
  • how to reduce the potential for false positives and how to address situations in which false positives occur.

Comments received on this Public Notice are likely to lay the groundwork for the FCC's next major action on call blocking and methods to eliminate illegal robocalls. Comments are due on September 24 and reply comments are due on October 8.

Petitions on Public Notice

The FCC continues to review reply comments it received to several petitions out on Public Notice. Reply comments on the Peer-to-Peer Alliance (P2P Alliance) Petition and the Insights Association, Inc. ("Insights Association") and the American Association for Public Opinion Research petitions were both due on July 9. As we reported previously, the P2P Alliance is a coalition of providers and users of peer-to-peer ("P2P") text messaging, and it has asked the FCC to clarify that P2P text messages are not subject to the TCPA. Very few reply comments were filed on the P2P Alliance petition, but all supported granting the petition. As we reported in June, the Insights Association petitioners asked the FCC to clarify several areas under the TCPA, including that "communications are not presumptively 'advertisements' or 'telemarketing' under the TCPA simply because they are sent by a for-profit company, or might be for an ultimate purpose of improving sales or customer relations." Few substantive reply comments were filed on this petition, all supporting the petition. In addition, of the over two hundred comments filed on this petition (many of which were brief "express" comments), only a single comment opposed the petition during the initial comment period, mainly focusing on the FCC's fax advertising rules.

PART II – TCPA: LITIGATION UPDATE

Insurance Coverage May Be Available to Some Policyholders for TCPA Lawsuits

By E. Crystal Lopez

The volume of TCPA class actions has rapidly increased in recent years. TCPA cases are attractive to plaintiffs' lawyers because of high statutory damages of $500 per violation and up to $1,500 per willful violation. They are also expensive to litigate. The first step for a company faced with a TCPA lawsuit is to immediately retain a competent counsel who is well-versed in handling such cases. The next step is to review all insurance policies that may apply and to carefully scrutinize the policies, the exclusions, and the allegations in the underlying complaint. The policies that may, at least on occasion, provide coverage for TCPA class actions include (1) Commercial General Liability Policy (CGL); (2) Director & Officer Policy (D&O); (3) Error & Omission Policy (E&O); and (4) Cyber Liability Policy.

It is worth noting that modern general liability policies are typically drafted to avoid providing coverage for TCPA class actions. Many policies now routinely contain an express exclusion to that effect. And some of the older polices that did not originally have a TCPA exclusion in them may have been amended in recent years. Yet, such later-added exclusions may be unenforceable in some states. See Cincinnati Insurance Co. v. Chapman, 2016 IL App (1st) 150919, ¶ 1, 403 Ill. Dec. 887, 889, 55 N.E.3d 74, 76 (May 23, 2016). (Had Illinois law applied, the later-added TCPA exclusion would have been unenforceable.)

Additionally, most CGL insurers have successfully argued that TCPA claims are not covered by the policies because TCPA damages amount to "penalties," for which there is no coverage. But at least one court disagreed with that approach. See Columbia Cas. Co. v. Hiar Holding, L.L.C., 411 S.W.3d 258, 268 (Mo. 2013).

There are also some instances where coverage may still be found under a CGL policy. For example, a court may find that coverage exists in a CGL policy for alleged TCPA violations involving telemarketing calls or fax blasts. The reasoning here is that the complaint alleges "bodily injury" and "property damage" within the meaning of the policy or triggers the "advertising" and "right to privacy" provisions of the policy.

Currently, there is a small but growing body of federal and state case law in which courts across the country have interpreted TCPA violations as falling within the scope of the "advertising injury" provision—again, on the premise that such violations invade consumers' privacy rights. See Owners Ins. Co. v. European Auto Works, Inc., 695 F.3d 814, 819 (8th Cir. 2012); Park Univ. Enters. v. Am. Cas. Co., 442 F.3d 1239, 1249-1250 (10th Cir. 2006); Hooters of Augusta, Inc. v. Am. Global Ins. Co., 157 Fed. Appx. 201, 208 (11th Cir. 2005); Western Rim Inv. Advisors, Inc. v. Gulf Ins. Co., 96 Fed. Appx. 960, 961 (5th Cir. 2004); Valley Forge Inc. Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352 (2006); Standard Mut. Ins. Co. v. Lay, No. 4-11-0527, 2014 WL 272773 (Ill; App. Ct. Jan. 23, 2014); Columbia Cas. Co. v. Hiar Holding, L.L.C., 411 S.W.3d 258, 270 (Missouri 2013); Penzer v. Transp. Ins. Co., 29 So. 3d 1000, 1006-07 (Fla. 2010). Some of these decisions have also emphasized that unsolicited faxes intrude on the recipient's right to privacy and seclusion, thus triggering CGL coverage. See Standard Mut. Ins. Co. v. Lay, No. 4-11-0527, 2014 WL 272773 (Ill; App. Ct. Jan. 23, 2014); Penzer v. Transportation Insurance Co., 29 So. 3d 1000, 1007 (Fla. 2010).

At least one court found that the "property damage" provision triggered coverage for a TCPA lawsuit because unsolicited faxes allegedly wasted paper and ink and caused the recipient to lose the use of its fax machine during the transmissions. Prime TV, LLC v. Travelers Insurance Company, 223 F. Supp. 2d 744, 750 (M.D.N.C. 2002). This type of coverage may be more likely for fax-blast cases under the TCPA, as opposed to other types of TCPA cases, where the allegations in the complaint include claims that the fax consumed toner and paper (i.e., tangible property).

Turning to E&O coverage, at least one court found a potential for coverage under a professional liability policy for a claim involving unsolicited fax advertisements. Landmark American Insurance Company. v. NIP Group, Inc, 962 N.E.2d 562, 576 (Ill. App. Ct. 2011). And, in a more recent case, a policyholder successfully obtained E&O coverage for TCPA claims under the "professional services" provision. Ill. Union Ins. Co. v. US Bus Charter & Limo Inc., 291 F. Supp. 3d 286, 293, 2018 U.S. Dist. LEXIS 38266, *14 (Mar. 8, 2018).

Where the complaint alleges improper acts by the company's directors, officers, or executives, there arguably may be TCPA coverage under a D&O policy. However, such arguments have not yet had much traction. Last year, the Ninth Circuit affirmed the lower court's ruling that invasion of privacy exclusion precluded D&O insurance coverage for a TCPA claim. L.A. Lakers, Inc. v. Fed. Ins. Co., 869 F.3d 795 (9th Cir. 2017).

In light of different state laws, varied policy language, and inconsistent interpretations by each court, it is often impossible to ascertain in advance whether TCPA claims will be covered by any given policy. Once the lawsuit has been filed, however, sophisticated legal counsel should be able to work with their coverage team to maximize coverage potential. Additionally, in light of a changing legal landscape and the growing number of TCPA lawsuits, businesses that engage in various forms of marketing should, where appropriate, obtain policies that specifically cover TCPA actions.

About Our TCPA & Consumer Calling Practice

In an economy where timely and effective communication with both current and prospective customers is vital to the success of nearly every business, modern technology, such as autodialers, recorded and artificial voice messages, text messaging, and e-mail provide companies the ability to reach large numbers of people with increasingly smaller up-front costs. But, companies cannot afford to overlook the hidden costs of using these mass communication methods if the many regulations that govern their use are not carefully followed.

Companies have been hit with class action lawsuits under the Telephone Consumer Protection Act (TCPA) for tens or even hundreds of millions of dollars. Mintz Levin's multidisciplinary team work tirelessly to help our clients understand the ever-changing legal landscape and to develop workable and successful solutions. TCPA rules can apply to certain non-sales calls, such as a recorded call to employees about a new work schedule or a text to customers about a new billing system. We advise on how to set up calling campaigns that meet state and federal requirements as well as how the Federal Communications Commission and the Federal Trade Commission apply their rules on calling, faxing, and texting. Given the uncertainties surrounding the TCPA as a result of the FCC's extensive and confusing rulings, we work with clients across many industries, health care, retail, communications and financial services, on matters relating to the following issues:

Compliance: Our TCPA team routinely advises companies on compliance with federal and state sales and marketing requirements. We also know what type of consumer consent is needed for each type of call and how specific consents must be worded. We know when and how to apply a do-not-call list and when and how an opt-out provision must be afforded.

Consumer class action defense: We've been called upon to handle TCPA class actions across all industries and in federal courts across the nation. Our seasoned litigators know the serial plaintiffs and counsel well and are unfazed by their schemes. Fortunately for our clients, our team has succeeded in winning at the motion stage or earlier in the vast majority of TCPA matters we have defended. That is what truly sets us apart. And if a case must go to trial, we have the experience and strength to follow it to the end.

Insurance coverage disputes: We know the arguments insurers use to deny coverage in TCPA suits because we've defended against them. More important, we have a long track record of convincing carriers to fund the defense of these actions and, in some cases, to pay significant portions of settlements. Our goal is to help secure insurance protection and to see to it that carriers make good on their coverage obligations when a claim arises.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Joshua Briones
Russell H. Fox
Natalie A. Prescott
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions