On October 12, the Ninth Circuit issued a decision, reversing the dismissal of a lawsuit on the grounds that the Telephone Consumer Protection Act (TCPA) does not extend to unwanted business texts. In Chennette v. Porch.com, the Ninth Circuit held TCPA statutory protections extend not only to individuals, but also to business entities.

The litigation involved claims that the defendants violated the TCPA by using an automatic telephone dialing system to send 7,527 text messages to plaintiff home improvement contractors with purported client leads. Fifteen of the 51 plaintiffs had registered their numbers with the national do-not-call registry.

The defendants moved to dismiss, contending, among other things, that the plaintiffs lacked statutory standing because the TCPA protects only individuals from unwanted calls. The Idaho district court judge agreed.

The Ninth Circuit rejected this argument, noting that 47 U.S.C. § 227(b) provides that a “person or entity” may recover money damages or obtain injunctive relief under the statute. “Using a plain language analysis and reading the statutory language in context, we conclude that under the most natural reading of the term, ‘entity’ includes a business. Section 227(b) thus covers calls to the cell phones of businesses as well as individuals.”

The defendants next argued that those 15 plaintiffs who subscribed to the do-not-call registry and who brought additional claims under Section 227(c) do not qualify for its protection as they used their cell phones for both business and personal purposes, and the implementing regulations apply only to “residential” telephone subscribers. The court noted that in response to a 2003 petition, the Federal Communications Commission (FCC) declined to explicitly exempt calls made to “home-based businesses” from protection, but instead said it would “review such calls as they are brought to our attention to determine whether or not the call was made to a residential subscriber.” Based on this FCC guidance and district court findings around the country, the Ninth Circuit held that cellphones on the registry are presumptively residential phones and can still be considered residential when used for both personal and business purposes.

The court said that the FCC has yet to clarify when a mixed-use phone ceases to become a residential phone and becomes a business phone, so the defendants could overcome the presumption that the disputed phones are residential later in the litigation by showing after discovery “that plaintiffs use their cell phones to such an extent and in such a manner that the presumption is rebutted.” The court elaborated that in determining whether the presumption has been rebutted, it would look at (1) how plaintiffs hold their phone numbers out to the public; (2) whether plaintiffs’ phones are registered with the telephone company as residential or business lines; (3) how much plaintiffs use their phones for business or employment; (4) who pays for the phone bills; and (5) other factors bearing on how a reasonable observer would view the phone line.

The majority additionally stated that the FCC “is free in future regulations or orders to interpret § 227(c) differently. If the FCC does so, we will of course defer to its interpretation, provided that the interpretation is consistent with a reasonable understanding of the statutory language.”

This opinion serves as an important reminder that business-related texts can still run afoul of the TCPA. Troutman Pepper will continue to monitor developments in TCPA litigation.