Congress enacted the Telephone Consumer Protection Act (“TCPA”) with the intent of stopping technology savvy telemarketers from making excessive calls. However, this statute can create enormous liability with minimal proof against anyone who uses an automated dialer.

Among its provisions, the TCPA precludes any person from making a call using an automatic telephone dialing system or an artificial or prerecorded voice to a cellular phone or pager without the prior express consent of the party to be called. 47 U.S.C. § 227(b)(1)(A)(iii). The TCPA further precludes the use of an artificial or prerecorded voice to deliver a message without the prior express consent of the called party. 47 U.S.C. § 227(b)(1)(B).

The TCPA is a strict liability statute. Each call-in violation of the statute is subject to a $500.00 penalty. 47 U.S.C. § 227(b)(3)(B). If the caller willful or knowingly violates the statute, then each statutory penalty can be trebled. 47 U.S.C. § 227(b)(3). Congress wanted this penalty to give consumers a way to recover damages in small claims court, without the need for attorneys. 137 Cong. Rec. S 16204, S16205-S16206.

Despite Congress’s intent, TCPA class action lawsuits have been filed across the country. These lawsuits have the potential of creating ruinous liability for any company. For example, a class consisting of 20,000 members who each received an average of five calls in violation of the TCPA results in a potential recovery of $50,000,000.

Defending TCPA class action cases requires an understanding of the source of the information. A client who uses technology to make marketing or collection efforts more efficient must be aware of the potential liability.

Class Certification Under the TCPA

Currently, the biggest obstacle to class certification is “prior express consent.” Several plaintiffs have argued “prior express consent” is an affirmative defense, and the burden of proof is on the defendant. They then argue the TCPA class should be certified unless the defendant can come forward with evidence to oppose the motion. The law is somewhat more complicated than this position.

The three seminal cases on propriety of class certification with “prior express consent” are: Forman v. Data Transfer, 164 F.R.D. 400 (E.D. Pa. 1995), Kavu v. Omnipak Corp., 246 F.R.D. 642 (W.D. Wash. 2007) and Gene and Gene, LLC v. Biopay LLC, 541 F.3d 318 (5th Cir. 2008).

In Forman, class certification was denied on the commonality and typicality prongs of Federal Rule 23(a). The court stated “[d]determining membership in the class would essentially require a mini-hearing on the merits of each case” because “the essential question of fact that each potential plaintiff must prove is whether a specific transmission to its machine was without express invitation or permission on its part.” Id. at 403. This inquiry is “inherently individualized” and requires inquiry into the circumstances of each contact to preclude certification. Ibid.

In Kavu v. Omnipak Corp., the court certified a class action because defendant obtained all called numbers from a third party’s database. Id., at 647. “[W]whether the recipients’ inclusion in the [third party’s] database constitutes express permission to receive advertisements via facsimile is a common issue.” Ibid. Unlike Forman, there was single source of telephone numbers which eliminated the individualized analysis. The Gene and Gene court reconciled Forman and Kavu to hold “plaintiffs must advance a viable theory employing generalized proof to establish liability with respect to the class involved, and it means too that district courts must only certify class actions filed under the TCPA when such a theory has been advanced.” Id., at 328. A proposed class lacks the required cohesiveness for certification without such generalized proof, and the plaintiff cannot satisfy the predominance requirement. Id at 329. While the burden of proof is not per se irrelevant to class certification, the plaintiff does have the burden of proof to prevail on a motion to certify a class. Ibid.

The conclusion gleaned from Forman, Kavu and Gene and Gene, is “prior express consent” is generally an individualized factor which will defeat class certification. If, however, a plaintiff can show generalized proof, class certification is proper. The next question is how “prior express consent” is given and how is maintained.

Prior Express Consent

Congress did not specifically define “prior express consent.” Instead, Congress delegated to the Federal Communication Commission the authority to “prescribe regulations to implement the requirements” of the TCPA. 47 U.S.C. § 227(b)(2). In 1992, the FCC issued a comprehensive report and order on the TCPA which considered “prior express consent.” In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 7 FCC Rcd 8752 (FCC 1992). The FCC ruled:

If a call is otherwise subject to the prohibitions of [the regulations], persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary. Hence, telemarketers will not violate our rules by calling a number which was provided as one at which the called party wishes to be reached.

Id., at 8769 [Emphasis added].

The FCC revisited the issue of “prior express consent.” In January of 2008, the FCC released a declaratory ruling to “clarify that autodialed and prerecorded message calls to wireless numbers that are provided by the called party to a creditor in connection with an existing debt are permissible as calls made with the ‘prior express consent’ of the called party.” In re Rules Implementing the Telephone Consumer Protection Act of 1991, 23 FCC Rcd 559 (F.C.C. 2007). The FCC further noted “autodialed and prerecorded message calls to wireless numbers provided by the called party in connection with an existing debt are made with the ‘prior express consent’ of the called party” and “are permissible.” Id., at 564.1 However, the caller bears the burden to maintain evidence showing “prior express consent” was given. Id., at 565.

Under the FCC’s interpretation, the called party must provide their telephone number to the caller before the first autodialed call is made. Neither the TCPA nor the FCC requires consent to be in writing, so verbal consent is valid.

Documents prepared by the consumer, such as credit applications or interest cards, are obviously the best source of documentation showing “prior express consent.” Companies relying on verbal consent should, at a minimum, maintain detailed notes of each conversation. Systems which record telephone conversations are a sound investment.

Telephone numbers obtained from third party call lists, skip tracing or Caller Id technology do not satisfy the TCPA’s requirement of the “prior express consent” of the called party Businesses can still call telephone numbers obtained from these sources if an automatic dialer system is not used to make the call. Businesses who use automatic dialers must be made aware of this distinction.

In sum, when a class action lawsuit is filed, it is necessary to understand what evidence to look for and what arguments are available to defeat class certification. The alternative can result in staggering liability.

It is worth noting Leckler v. Cashcall, 554 F. Supp. 2d 1025 (N.D. Cal. 2008), rejected the FCC’s interpretation of “prior express consent.” The Leckler court held “prior express consent” under the TCPA means “the called party must expressly consent not only to receiving telephone calls, but to receiving calls made by a caller using an auto dialer or prerecorded message.” Id., at 1030. The Leckler court later vacated its opinion because the Hobbs Act does not vest federal district courts with subject matter jurisdiction to disregard the FCC rulings. Leckler v. Cashcall, Inc., 2008 U.S. Dist. LEXIS 97439, *7-8 (N.D. Cal. 2008). To date, no federal appellate court has overruled the FCC’s interpretation of “prior express consent.”