On Friday, October 26th, from 2 – 3 pm ET, Troutman Sanders attorneys, David Anthony, Dave Gettings and Virginia Flynn will present a webinar that will help you make sense of the shifting TCPA landscape. It will focus on the different ways courts throughout the country have addressed the interpretation of an automatic telephone dialing system (“ATDS”) since ACA International, how courts have treated previously-binding orders from the Federal Communications Commission (“FCC”), and the different ways courts have handled motions to stay pending future guidance from the FCC. This webinar will help you attack current TCPA claims you may be facing and plan for TCPA claims you are trying to avoid.

Scheduling conflict? Register to receive the recording after the webinar. 

One hour of CLE credit is pending.

To register, click here.

We are pleased to announce that Troutman Sanders attorney Ron Raether will be presenting during the 33rd Annual SoCal Security Symposium in Costa Mesa, California at the Hilton Orange County Hotel. Ron will present, “Cloudy with a Chance of Legal Action: Managing Cyber Risks in an Increasingly Outsourced World,” on October 25th at 8:30 a.m. The conference offers great opportunities to network, earn CLE credits, meet vendors and stay informed on cybersecurity.

Attendees will gain knowledge through the below key takeaways of Ron’s panel:

  • What is the legal landscape relating to the Cloud
  • Lessons learned from litigation experience
  • What steps should be taken as to governance and compliance to mitigate future of Cloud risks

To register or obtain additional information, visit the ISSA Website.

In the last few years, the right to privacy debate in the United States has increased in pace and volume. One issue at the center of this long debate is how best to implement the right privacy tools in a manner that does not disrupt business and technological innovation. The current criticisms fail to appreciate that the next technological paradigm is completely dependent on both the quality and quantity of data.

As connected things (IoT) explode in popularity, they make things such as augmented reality (AR) and autonomous vehicles possible. And as interconnectivity grows, so too do the opportunities. The companies that fail to properly leverage new technologies and data opportunities may find themselves falling behind their competitors.

In venturing into these emerging paradigms, companies should stay informed of recent enforcement actions, cases, and laws to determine how their role within new ecosystems may be impacted.

This publication covers the ongoing evolution of the legal landscape for data-centric products, so that organizations can continue to succeed in their development of data-centric products.

Click here to download the report

09.21.18

Executive Summary

  • On September 20, 2018, the Ninth Circuit in Marks v. Crunch San Diego, LLC (Case: 14-56834), overturned a lower court’s ruling that a text messaging system was not an automatic telephone dialing system (ATDS) under the Telephone Consumer Protection Act (TCPA), holding instead that the statutory definition of an ATDS includes a device that stores telephone numbers to be called, whether or not those numbers have been generated by a random or sequential number generator.
  • The Court found that because the language of the TCPA was ambiguous, it used canons of construction, legislative history, and the statute’s overall purpose in determining that a system only needs to store numbers and then dial them automatically to qualify as an ATDS.
  • The Court declined to follow the Third Circuit’s opinion in Dominguez v. Yahoo, Inc., noting the decision unpersuasive as it contained an “unreasoned assumption that a device must be able to generate random or sequential numbers in order to qualify as an ATDS” and “merely avoided the interpretive questions raised by the statutory definition of ATDS.”
  • Many anxiously await the Federal Communication Commission’s (FCC) updated ruling on the definition of an ATDS because its omnibus overhaul will certainly be guided by the analytical framework set forth in the D.C. Circuit’s opinion, and the new Chairman has questioned many of the FCC’s interpretations that have led to the proliferation of TCPA lawsuits.

Background

The system at issue is called the Textmunication system, which is a web-based marketing platform designed to send promotional text messages to a list of stored telephone numbers. Phone numbers can be input manually or automatically. Crunch Fitness communicates with its prospective and current gym members by sending text messages through the Textmunication system, which, after a Crunch Fitness employee logs in, selects the phone numbers, and generates the content, automatically sends the text messages to the selected phone numbers.

Marks signed up for a gym membership with Crunch Fitness in 2012. Over an eleven- month period, he received three text messages. In 2014, Marks filed a putative class action against Crunch Fitness, alleging violations of the TCPA.

The district court granted summary judgment in favor of Crunch Fitness on the ground that the system at issue did not qualify as an ATDS because it did not have the capacity to randomly or sequentially generate numbers and then dial those numbers.

Analysis

After spending significant ink discussing the intent and purpose behind the creation of the TCPA, noting that much of what was written in 1991 related to the technology at the time, the Court discussed ACA International and its effect on the statute itself. The Court noted that because the D.C. Circuit vacated the FCC’s interpretation of what device qualified as an ATDS, “only the statutory definition of ATDS … remains.” (Op., p. 17-18.) Essentially, we have a blank slate. The next issue was whether the statutory text was “plain and unambiguous” or “ambiguous.”

The Court in an almost conclusory fashion found that the statutory text was confusing and thus ambiguous, as evidenced by: (1) Marks and Crunch Fitness offering competing interpretations of the language, and (2) the D.C. Circuit’s opinion finding that “‘[i]t might be permissible’ for the FCC to adopt an interpretation that a device had to generate random or sequential numbers in order to be an ATDS, or that a device could be an ATDS if it was limited to dialing numbers from a stored list.” (Op., p. 20.) The Court then looked to the context and structure of the statutory scheme as well as the statute’s overall purpose for clarification.

“Although Congress focused on regulating the use of equipment that dialed blocks of sequential or randomly generated numbers – a common technology at that time – language in the statute indicates that equipment that made automatic calls from lists of recipients was also covered by the TCPA.” In short, the Ninth Circuit held that Congress intended to regulate devices that make automatic calls. Specifically, as support for this statement, the Court noted:

  • Provisions in the TCPA allow an ATDS to call selected numbers (i.e., those who have provided prior express consent); and
  • Provisions in the TCPA permit exceptions to the statute, which allows a system that qualifies as an ATDS to automatically call specific numbers from a set list.

The Court held, therefore, that “the statutory definition of ATDS is not limited to devices with the capacity to call numbers produced by a ‘random or sequential number generator’, but also includes devices with the capacity to dial stored numbers automatically.” In short, the definition of an ATDS means “equipment which has the capacity – (1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator – and to dial such numbers.” (Op., p. 23.)

Practical Implications

There are a few key points that must be noted:

  1. Definition of an ATDS: A severe definition of an ATDS now controls in the Ninth Circuit – absent a successful further appeal.

    What does this mean? Plaintiffs in the Ninth Circuit will likely argue that “anything qualifies as an ATDS.”

  2. Human Intervention: Many have argued (and some courts have agreed) that a system is not truly automatic when human intervention is involved. The Court here essentially found that if human intervention is minor, such as when a person “turn[s] on” or “triggers” a system to dial numbers, the system still qualifies as an ATDS. The Court noted that Congress was targeting equipment that could “engage in automatic dialing, rather than equipment that operated without any human oversight or control.” Thus, merely “flip[ping] the switch on an ATDS,” does not qualify as human intervention, nor does human intervention occur when a human adds phone numbers to a dialing platform.

    What does this mean? Companies should still argue aggressively that human intervention is a necessary part of their telephone or texting system; however, systems that require minimal human intervention may satisfy the Marks definition of an ATDS within the Ninth Circuit.

  3. Capacity: One of the hot button issues is whether capacity means “present” or “potential.” The Dominguez court (among others) found that it meant present. However, the Court here declined to “reach the question whether the device needs to have the current capacity to perform the required functions or just the potential capacity to do so.”

    What does this mean? We continue to live in a world of uncertainty and doubt (at least in the Ninth Circuit), but we take it as a good sign that the Court did not speak to this issue. The trend has been present capacity and we are hopeful that the FCC will cement that in the future.

  4. Possible FCC action: The FCC is currently considering new interpretations of the TCPA in light of ACA International. If nothing else, Marks has raised the stakes of FCC action even higher. All eyes are on the FCC; many are expecting the FCC to issue its new interpretation after the mid-terms, perhaps by the end of the year.

Overall, the Court’s opinion in Marks is a reminder that the TCPA is alive and well. Plaintiff’s lawyers will continue to file litigation and companies will need to continue their strong efforts of TCPA compliance.

On Wednesday, September 26th, from 2 – 3 pm ET, Troutman Sanders attorneys, David Anthony and Andrew Buxbaum will present a webinar discussing an in-depth examination and update on the FDCPA as well as the impact on the debt collection industry. The discussion will focus on recent case law, litigation trends and current regulatory enforcement initiatives in connection with this consumer protection statute.

The panel will review these and other key questions:

  • What are common causes of action under the FDCPA?
  • What are the litigation trends under the FDCPA?
  • What regulatory and enforcement actions should be of most concern to debt collectors under the current administration, from the FTC, CFPB and others?

One hour of CLE credit is pending.

To register, click here.

By: Ashley Taylor, David Anthony, Stephen Piepgrass and Ryan Strasser

The Virginia Consumer Protection Act (VCPA), Virginia Code § 59.1-196 et seq., represents the Virginia General Assembly’s effort to enact a sweeping and potent remedial tool to protect consumers from exploitation by a business where the consumer has engaged in a “consumer transaction” with that business. Where a violation of the VCPA has occurred, the statute authorizes both consumers and the Virginia attorney general to enforce its prohibitions and to seek various forms of relief.

In recent years, the Virginia Office of the Attorney General has ramped up its VCPA enforcement efforts. In perhaps a harbinger of things to come, Virginia Attorney General Mark Herring filed a complaint on March 6, 2018, under the VCPA in Commonwealth ex rel. Herring v. Future Income Payments LLC f/k/a Pensions, Annuities and Settlements LLC, in the Circuit Court for the City of Hampton. Attorney General Herring asserts a single claim in the case — that the corporate defendant violated the VCPA.

To read more click here for the VBA Fall 2018 Journal

 

 

A Fifth Circuit panel has rejected an administrative subpoena from the Consumer Financial Protection Bureau that sought documents and other information from a Texas-based public records search company, marking only the second time that an appeals court has declined to enforce one of the consumer watchdog agency’s so-called civil investigative demands.

In six-page decision filed Thursday, the three-judge panel said the CID issued to The Source for Public Data LP had failed to give adequate notice of what conduct the CFPB was investigating and what law the agency thought might have been broken.

Click here to read more on Law360

The Federal Trade Commission (FTC) announced in mid-July that it conducted the first compliance sweep of car dealerships since the effective date of its revised Used Car Rule requiring the use of a new Buyer’s Guide sticker. The sweep occurred between April and June 2018 in 20 cities nationwide. The FTC partnered with 12 agencies in seven states to ensure dealers are displaying a revised version of the Buyer’s Guide, which contains warranty and other information for consumers. 

In the sweep, the FTC inspected over 2,300 vehicles at 94 car dealerships in seven states. Inspectors found that approximately 70 percent of vehicles displayed Buyer’s Guides and roughly half of those displayed the appropriate revised Buyer’s Guide. Just 33 dealerships posted the revised Buyer’s Guide on more than half of their vehicles, and only 14 dealerships were compliant in having revised Buyer’s Guides on all their used vehicles for sale. 

To read full article go to Auto Finance Excellence.

We are pleased to announce that Troutman Sanders attorneys David Anthony, Cindy Hanson, Timothy St. George and Julie Hoffmeister will be presenting during the 2018 NAPBS Annual Conference Passport to the World CCN in Baltimore, Maryland. NAPBS wants to provide Legal and Compliance information to all members and non-members attending the conference. Cindy, David and Timothy will be presenting information on a panel together called, “Litigation and Compliance in Background Screening: The Business Perspective,” on October 8th at 10:30 a.m. Cindy Hanson will also be a speaker at the general session on October 8th at 4 p.m. Julie Hoffmeister will be on a speaker panel discussing, “Island of Misfit Toys: How Does the FCRA Apply to FINRA Onboarding, Vendor Credentialing, Volunteers, Independent Contractors, and Other “Not Quite Employment” Circumstances “If at All),” on October 9th at 11:30 a.m.

Stay to the End to Hear from Three Top Legal Minds

Stick around for all the fun of the Annual Conference. You’ll want to stay for our closing General Session! A panel of three of the industry’s top FCRA attorneys will be on hand to answer your burning questions in “You’ve Got Questions – They’ve Got Answers!” You can’t afford to miss this must-see session with Pam Devata, Seyfarth Shaw LLP; Becki Kuehn, Hudson Cook LLP; and David Anthony, Troutman Sanders LLP.

Attendees will:

  • Gain valuable tips and advice in on working with Consumers
  • Discuss and Learn top issues that are happening now FCRA Litigation
  • Network with highly talented individuals in the legal and legislative department
  • Stay up to date with ongoing Litigation and Compliance in Background Screening

To register or obtain additional information, visit the NAPBS website.

We are pleased to announce that Troutman Sanders attorney Ron Raether will be presenting during the Ninth Annual National Institute on Consumer Financial Services Basics in Chicago. Ron will speak on a panel entitled, “Financial Privacy and Security,” on October 11th at 2:00 p.m. The conference will take place at the Wyndham Grand Chicago hotel. The conference offers great opportunities to network, earn CLE credits, meet vendors and stay informed on Consumer Finance.

Attendees will learn through these key topics:

  • History and development of federal and state consumer financial services laws
  • Truth in lending and disclosure requirements
  • Fair lending
  • Financial privacy and credit reporting
  • Data security, fraud prevention, and identity theft protection
  • Consumer communications: FDCPA, TCPA, TSR, CAN-SPAM, and others
  • Asset account regulation
  • Mortgage origination and servicing
  • UDAAP
  • Litigation and enforcement actions

To register or obtain additional information, visit the ABA website.