The Federal Communications Commission, at its July 14, 2022 Open Meeting, issued one of its largest proposed fines ever against an individual and his companies that engaged in conduct that violated the Telephone Consumer Protection Act (TCPA) and the Commission's rules prohibiting prerecorded voice message calls. The Notice of Apparent Liability (NAL) proposed a penalty of $116,156,250 against Thomas Dorsher and his companies ChariTel Inc., Ontel, Inc. and ScammerBlaster, for sending 9,763,599 prerecorded voice message calls to toll free (8YY) numbers without consent of the called parties.
The Commission's NAL outlines a brazen scheme by Dorsher using his business relationship with a Local Exchange Carrier to originate telephone calls to 8YY numbers for the primary purpose of generating revenue from long distance carriers whose toll free customers received these calls. Under this scheme, Dorsher caused millions of calls to be placed with a prerecorded self-proclaimed "Public Service Announcement" warning toll free customers about the dangers of illegal robocalls, and directing recipients to report robocalls to the FCC, phone companies, and the Dorsher entities' website. The calls were placed between January 1, 2021 and March 2, 2021.
For each minute of use, the toll free long distance carriers paid what are known as "access charges" to the Local Exchange Carrier identified as Integrated Path Communications, based in New York. Integrated Path Communications then shared with ChariTel the revenue received from the long distance carriers. Some of the robocalls would play continuously for up to 10 hours if the called party did not terminate the call. The Commission's NAL did not identify the amount of revenue Integrated Path paid to ChariTel, but the agreement between ChariTel and Integrated Path called for ChariTel to be paid $0.0001 per minute of use on each call (although the NAL also uses the rate of $0.001 per MOU.)
The TCPA and the Commission's rules prohibit companies making prerecorded voice message calls to any telephone number to any telephone numbers assigned to "any service for which the called party is charged for the call," unless there is prior express consent, or if the call is made for an emergency purpose. 47 U.S.C. § 227(b)(1)(A)(iii); 47 CFR § 64.1200(a)(1)(iii). In 2019, the Telephone Robocall Abuse Criminal Enforcement and Deterrent (TRACED) Act was adopted, giving the Commission authority to issue a Notice of Apparent Liability for violations of Section 227(b) of the Act without first issuing a citation.
The Commission became aware of the scheme in October 2020, when an industry consortium known as the Industry Traceback Group (ITG) reported to the Commission that Dorsher and his companies were targeting 8YY telephone numbers with prerecorded voice message calls. The Commission's investigation focused on the calls placed between January 1, 2021 and March 2, 2021. This investigation verified that 20,650 were made to called parties that did not consent to receive those calls, and were not made for an emergency purpose. Two of the calls were made to AT&T, which confirmed that it did not consent to receive the calls. Notably, the Commission learned from one of the complainants that, when confronted about the harassing call, one of the Dorsher entities responded by saying "if you think the FCC will do anything, you are very much mistaken." This is a statement that clearly inspired the Commission to take action.
The NAL proposed a base forfeiture of $4,500 for each of the 20,650 calls that were verified to have been made to parties that did not provide prior express consent. The Commission further found that Dorsher and his companies acted with the intent to place calls that were knowingly made in violation of the TCPA. According to the Commission, Dorsher and his companies had no record of any prior consent from any of the parties that were called, and the revenue sharing arrangement with Integrated Path Communications made it clear that Dorsher and his companies acted in knowing violation of the law. Given the egregious nature of the conduct, the Commission adjusted the base forfeiture upward to $5,625 (an increase of 25%) for each violation. The Commission also determined that given the integrated nature of dealings between Dorsher and his corporate entities, that Dorsher himself was jointly and severally liable for the $116,156,250 penalty.
FCC Petitions Tracker
Kelley Drye's Communications group prepares a comprehensive summary of pending petitions and FCC actions relating to the scope and interpretation of the TCPA.
Number of Petitions Pending
- 29 petitions pending
- 1 petition for reconsideration of the rules to implement the government debt collection exemption
- 1 application for review of the decision to deny a request for an exemption of the prior express consent requirement of the TCPA for "mortgage servicing calls"
- 1 request for reconsideration of the 10/14/16 waiver of the prior express written consent rule granted to 7 petitioners
New Petitions Filed
- On January 26, 2022, the National Consumer Law Center and other consumer groups filed an ex parte letter requesting that the FCC expressly exclude prerecorded scam calls and automated texts from the exemptions from the consent requirement for these calls and texts in 42 U.S.C. § 227(b).
- In the Matter of Advanced Methods to Target & Eliminate Unlawful Robocalls Call Authentication Tr. Anchor, No. CG17-59, 2022 WL 1631842, at *2 (OHMSV May 20, 2022)
Click here to see the full FCC Petitions Tracker.
Cases of Note
California District Court Finds that TCPA Claims for Calls to Former Customers May Not Be Subject to Arbitration Clauses
A California federal district court recently denied a Defendant's motion to compel arbitration because Defendant's alleged conduct arose after its contracts with the Plaintiffs were terminated, holding, therefore, that the arbitration agreement did not cover "the dispute in question."
The agreements, however, allowed the Plaintiffs to terminate the TOS by discontinuing use, which Plaintiffs did by canceling their subscriptions. After Plaintiffs canceled their subscriptions, they alleged to receive unsolicited calls from Defendant soliciting renewals.
Plaintiffs brought two claims against Defendant for violating the TCPA: (1) for "making telemarketing calls to individuals listed on the National Do Not Call Registry without written consent" and (2) "continuing calls despite receiving 'do not call' requests."
In its analysis, the Court recognized that the Ninth Circuit applies a presumption in favor of postexpiration arbitration "unless 'negated expressly or by clear implication' [for] matters and disputes arising out of" the contract. "A 'postexpiration' claim," the Court explained, "has its real source in a contract in three circumstances," including, as relevant here, "where, under normal principles of contract interpretation, the disputed contractual right survives expiration of the remainder of the agreement."
The Court thus needed to determine whether the parties "intend[ed] for the arbitration clause to survive expiration of the contract." The court rejected Defendant's arguments that the arbitration clause survived because its use of Plaintiffs' phone numbers to encourage them to renew their subscriptions was within the scope of the clause. The court further found that "[D]efendant did not continually call plaintiffs to enforce a provision of the agreement plaintiffs failed to meet prior to termination" and in Kelly the Plaintiffs repeatedly and explicitly asked Defendant to stop contacting them.
Thus, the Court found that Plaintiffs were no longer bound by the arbitration clause and denied Defendant's motion to compel arbitration.
Kelly v. McClatchy Company, LLC, No. 2:21-cv-01960-KJM-JDP, 2022 WL 1693339 (E.D.Cal. May 26, 2022).
A Washington federal court found that a pro se Plaintiff's TCPA claim was frivolous and asserted in bad faith, awarding Defendants $40,000 in reasonable attorney fees.
In Barton, Defendants accused Plaintiff of being a "serial pro se litigant" who "willingly provided the number for his 'judicial branch advocacy' cell phone, in a bad faith effort to 'manufacture' a TCPA claim." Defendants argued that Plaintiff's claims were demonstrably frivolous and sought an award of $160,000 in attorneys' fees. While the Court lowered the damages awarded from the amount sought by Defendants as per the "reasonable hourly rate" in the "relevant community" of Tacoma, Washington, it ultimately granted Defendants' motion for attorneys' fees.
The Court noted that Plaintiff's claims were frivolous and made in bad faith because plaintiff conceded that he willingly provided his phone number to Defendants and affirmatively consented to the calls that he claimed violated the TCPA.
In its decision, the Court found that the "number [Plaintiff] gave was for a business phone, used to create, build, manufacture, [and] collect evidence in support of...his TCPA claim." The Court added that Plaintiff "freely admitted as much on his website...He wanted and intended to receive calls on his business phone, so that he could sue."
Thus, the Court concluded with "little trouble" that Plaintiff invited Defendants' calls in order to harass Defendants "in the name of making telemarketers 'compensate' him." The Court granted Defendants' motion for attorneys' fees and awarded Defendants $40,000 in reasonable attorney fees.
Barton v. Leadpoint, Inc., et al., No. C21-5372 BHS, 2022 WL 1746664 (W.D.Wash. May 31, 2022).
In November 2021, we discussed a decision out of the Eastern District of Pennsylvania that granted summary judgment for Defendant, Navient, based on Plaintiffs' failure to establish that an ATDS was used to call Plaintiffs' phones. On June 14, the Third Circuit upheld the district court's grant of summary judgment, but on alternative grounds.
In Panzarella, Plaintiffs argued that Navient violated the TCPA by calling their cellphones without their prior express consent using an automatic dialing system ("ATDS"). Navient serviced the loans of Matthew Panzarella who provided his mother's and brother's phone numbers as part of his references on his application and promissory note. Once he became delinquent on his loans, Navient allegedly called his mother four times and his brother fifteen times.
Navient used dialing software equipment developed by Interactive Intelligence Group Inc. ("ININ") to call Plaintiffs. Despite the fact that the equipment could be classified as an ATDS, the Third Circuit declined to decide whether Navient's dialing equipment did qualify as an ATDS under the TCPA because "Navient did not use an ATDS when it called the Panzerellas."
The Court reasoned that while ININ offered various 'campaigns,' which had the ability to generate random numbers, Navient chose to use a campaign which used "lists [that] contained contact information drawn from Navient's internal database of account information rather than computer-generated number tables." Thus, the Third Circuit upheld the district court's grant of summary judgment because the Plaintiffs could not maintain that Navient used an ATDS in violation of the TCPA.
In his concurrence, U.S. Circuit Judge Joseph Greenaway stated that the question in the case should have been: "What is an ATDS under Section 227(a)(1)?" In his opinion, Judge Greenaway states that he would have held "that a dialing system must actually use a random or sequential number generator to store or produce numbers in order to qualify as an ATDS."
"What is an ATDS?" is an ongoing issue that courts throughout the country are still grappling with after the Supreme Court decision in Duguid v. Facebook – and an issue that Kelley Drye continues to closely monitor. (See our recent discussion regarding Hunsinger published in our June TCPA Tracker).
Panzarella v. Navient Sols., Inc., No. 20-2371, 2022 WL 2127220 (3d Cir. June 14, 2022).
California District Court Dismisses TCPA Class Action for Lack of Standing
On July 12, 2022, California district judge John Mendez granted a motion to dismiss TCPA and Texas state law claims, finding that Plaintiff did not allege sufficient facts to establish that she had standing to bring suit. Plaintiff brought suit alleging violations of the TCPA and Texas state law as a result of a minimum of five text messages allegedly sent by Defendant entertainment companies "soliciting [Defendants'] merchandise to the phone number used by [Plaintiff's] minor son." The Court opened by stating that under Article III of the Constitution, a Plaintiff must establish standing for the Federal Court to have subject-matter jurisdiction over the case. Standing requires a plaintiff to have "(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision."
The Court found Plaintiff's standing arguments unpersuasive because Plaintiff had not pled that she had actually received any of the text messages, but had instead pled that she was "the subscriber and owner of the phone."
Plaintiff alleged in her first amended complaint that she had standing to bring suit because "(1) she received text messages to her cell phone number which was registered on the Do-Not-Call list; and (2) the messages invaded her right to be left alone." The Court, however, noted that the first amended complaint "clearly indicates Plaintiff's son was the phone user and the recipient of the messages," even if Plaintiff had "attempt[ed] to rewrite the [complaint] in her opposition brief[.]" In her brief, Plaintiff contended "that  she [actually] received the text messages," but the Court did not take this into account because it was not alleged in the complaint and "a complaint cannot be amended through an opposition to a motion to dismiss."
In analyzing the case law presented by both parties, the Court further found that Plaintiff had not brought forth "any binding authority supporting the proposition that she has standing merely as the subscriber/owner of the phone." Defendants, on the other hand, cited to case law to support their arguments that the "actual user of the number" is who "the TCPA is intended to protect," and the term "called party" in the TCPA "means the actual recipient of the calls or texts and not the owner." Citing to another California district court, the Court closed by noting that where a party fails to oppose arguments "raised in a motion to dismiss," that party has waived such arguments.
Ultimately, the Court held that Plaintiff had not "carried her burden to show she has standing." The Court granted Defendants' motion to dismiss for lack of standing, and for that reason, did not reach additional 12(b)(6) failure to state a claim arguments.
Hall v. Smosh Dot Com, Inc., No. 2:21-cv-01997-JAM-AC, 2022 WL 2704571 (E.D. Cal. July 12, 2022).
The Oklahoma Telephone Solicitation Act of 2022 ("TSA") was signed into law on May 20, 2022, and will go into effect on November 1, 2022. The new law sets in place a new, "Mini-TCPA" in Oklahoma. The Oklahoma law allows for any called party "aggrieved by a violation" of the Act to both (i) enjoin the violation, and (ii) recover "actual damages" or $500, whichever is greater. In addition, if a court finds that the calling party acted "willfully, or knowingly" in violating the TSA, the court is allowed the discretion to increase the damages "to an amount equal to not more than three times" the amount of the damages. This new Oklahoma law follows Florida's passage of a similar telemarketing bill in May 2021, which we have previously discussed.
Under the Oklahoma TSA (linked here), commercial telephone sales calls cannot be made, nor "knowingly allow[ed] to be made," if the call "involves an automated system for the selection or dialing of telephone numbers" or if the call involves "playing of a recorded message when a connection is completed. . . without the prior express written consent of the called party." The law defines prior written consent as including, among other requirements, "the signature of the called party."
In terms of Caller ID, the law makes it unlawful to "fail to transmit or cause not to be transmitted" both the originating telephone number, and "when made available" by the carrier, the name of the "telephone solicitor[.]" This provision contains a carve out, however, noting that it would not be a violation of the law to replace the name and telephone number with that of "the name of the seller on behalf of which" the call is being made, along with "the seller's customer service telephone number[.]"
The law also prohibits the intentional alteration of "the voice of the caller in an attempt to disguise or conceal the identity of the caller in order to defraud, confuse, or financially or otherwise injure" the person being called. Crucially, the TSA further creates a "rebuttable presumption" that any commercial calls made to "any area code" in Oklahoma is being made to either "an Oklahoma resident or to a person in [Oklahoma]" at the time the call is made.
The TSA further places a prohibition on commercial telephone solicitation calls before 8:00 AM and after 8:00 PM in the local time of "the called person's time zone." It also places a limit on the number of calls that may be made "from any number" to a person over a twenty-four-hour period: no more than three calls "on the same subject matter or issue," no matter the phone number used to place the call.
Finally, the law allows for various exemptions. Among the exemptions are persons "engaging in commercial telephone solicitation where the solicitation is an isolated transaction," persons "soliciting for religious, political, or education purposes," and persons who are "licensed securities, commodities, or investment broker[s]." Other exempt callers include licensed insurance brokers, cable television solicitation calls, and persons "soliciting business from prospective consumers who have an existing business relationship with or who have previously purchased from the business enterprise[.]"
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.