Litigation of the Telephone Consumer Protection Act (TCPA) is an active area with frequent developments important to the consumer finance space. Two recent cases are worthy to note. In Loyhayem v. Fraser Fin. & Ins. Servs., Inc., 7 F.4th 1232 (9th Cir. 2021), the U.S. Court of Appeals for the Ninth Circuit held that the TCPA applies not only to "telemarketing" or "advertising" calls, but also to job-recruitment robocalls. In Fischman v. MediaStratX, LLC, No. 20-CV-83, 2021 WL 3559639 (E.D.N.C. Aug. 10, 2021), the Eastern District of North Carolina entered the debate on whether 47 C.F.R. § 64.1200(d) contains a private right of action by holding that it does.
Lenders should be aware of these developments because Loyhayem solidifies a broader interpretation of what constitutes the use of autodialer technology and Fischman moves the needle on the weight of authority supporting an interpretation of the TCPA to require private parties to maintain policies and procedures regarding a private do not call list.
At issue in Loyhayem is the scope of 47 U.S.C. § 227(b)(1)(A)(iii)'s prohibition on making calls using an autodialer or an artificial or prerecorded voice to any telephone number assigned to a cellular telephone service. The plaintiff alleged that he received a "job recruitment call" on his cell phone that was made using both an autodialer and an artificial or prerecorded voice. Id. at 1233?34. The district court granted the defendant's motion to dismiss without leave to amend, holding that the job recruitment call did not constitute "a telemarketing or advertisement call" prohibited by the TCPA. The district court relied on the definitions of "advertisement" and "telemarketing" under 47 C.F.R. § 64.1200(f)(1) and (f)(12). Id. at 1234. An "advertisement" under § 64.1200(f)(1) is "any material advertising the commercial availability or quality of any property, goods, or services." "Telemarketing" is defined under § 64.1200(f)(12) as "[the initiation of] a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person." See Loyhayem, 7 F.4th at 1234.
The Ninth Circuit reversed, holding that the restrictions on use of an autodialer under 47 U.S.C. § 227(b)(1)(A)(iii) are not limited in scope to telemarketing or advertisements. Citing 47 C.F.R. § 64.1200(a)(1), the Ninth Circuit further found that the FCC implementing regulation does not limit the scope of restrictions on the use of an autodialer solely to telemarketing or advertisements. Loyhayem, 7 F.4th at 1235. The court further noted that although robocalls involving telemarketing or advertising require prior express written consent and other calls require only prior express consent, this did not remove robocalls from the scope of the TCPA's coverage unless the calls involve advertising or telemarketing. Id.
In Fischman v. MediaStratX, LLC, the United States District Court for the Eastern District of North Carolina weighed in on a different and more contentious issue—whether consumers have a private right of action to assert a claim under 47 C.F.R. 64.1200(d). Subsection (d) of § 64.1200 requires persons or entities that initiate a call for telemarketing purposes to institute procedures for maintaining a list of persons who request not to receive such calls. Courts disagree on whether the FTC promulgated § 64.1200(d) pursuant to its authority under 47 U.S.C. § 227(c) or (d). Because a private right of action exists only under § 227(c), the answer turns on which subsection provides authority for the FTC's promulgation of § 64.1200(d).
Only the U.S. Court of Appeals for the Sixth and Eleventh Circuits have decided the issue, each finding a private right of action. Charvat v. NMP, LLC, 656 F.3d 440, 443 (6th Cir. 2011); Cordoba v. DIRECTV, LLC, 942 F.3d 1259, 1265 (11th Cir. 2019). District courts in the First, Third, Fifth, Seventh, and Eighth Circuits have generally found that a private right of action exists. Rosenberg v. LoanDepot.com LLC, 435 F. Supp. 3d 308, 324 (D. Mass. 2020); Shelton v. Fast Advance Funding, LLC, 378 F. Supp. 3d 356, 364 (E.D. Pa. 2019); Callier v. Keeping Cap., LLC, No. EP-21-CV-00011, 2021 WL 2742766, at *4 (W.D. Tex. Apr. 22, 2021); Bilek v. Nat'l Cong. of Emps., Inc., 470 F. Supp. 3d 857, 863 (N.D. Ill. 2020); Hand v. Beach Ent. KC, LLC, 456 F. Supp. 3d 1099, 1124 (W.D. Mo. 2020). District courts in the Tenth Circuit have split on the question. Compare Barrett v. Vivint, Inc., Case No. 19-cv-00568, 2020 WL 2558231, at *6 (D. Utah May 20, 2020) (finding a private right of action because the purpose of § 227(c) is aligned with the private do not call list requirement under § 64.1200(d)) with Braver v. NorthStar Alarm Servs., LLC, Case No. CIV-17-0383, 2019 WL 3208651, at *14 (W.D. Okla. July 16, 2019) (finding § 64.1200(d) is technical and procedural in nature, and therefore, aligned with § 227(d)).
The U.S. Court of Appeals for the Fourth Circuit affirmed dismissal of a TCPA claim under § 64.1200(d) in an unpublished per curiam opinion without discussing whether a private right of action exists. Worsham v. Travel Options, Inc., 678 F. App'x 165 (4th Cir. 2017). Until Fischman, district courts in the Fourth Circuit generally found that no private right of action exists under § 64.1200(d) because the provision is procedural in nature and aligned with the authority under § 227(d). See, e.g., Wilson v. PL Phase One Operations L.P., 422 F. Supp. 3d 971, 982 (D. Md. 2019); Worsham v. Travel Options, Inc., Civil No. 14-2749, 2016 WL 4592373, at *4 (D. Md. Sept. 2, 2016); Scruggs v. CHW Grp., Inc., Action No. 20cv48, 2020 WL 9348208, at *9 n.5 (E.D. Va. Nov. 12, 2020); Worsham v. Disc. Power, Inc., Civil Action No. 20-0008, 2021 WL 50922, at *4 (D. Md. Jan. 6, 2021) ("§ 64.1200(d)(4) is more appropriately viewed as setting procedural standards and, therefore, within the realm of the TCPA's subsection d, for which no private right of action exists.").
Fischman splits the district courts in the Fourth Circuit much like the Tenth Circuit. More recently, the U.S. District Court for the Western District of North Carolina cited Fischman in deciding that § 64.1200(d) contains a private right of action. Boardman v. Green Dot Corp., No. 21-CV-00174, 2021 WL 3699856, at *3 (W.D.N.C. Aug. 19, 2021).
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