Morrison Foerster’s Class Dismissed blog provides insights, recommendations, and timely reports on the latest defense news, developments, and trends in the most current class actions lawsuits and product liability issues that affect consumer-facing companies. Through Class Dismissed, attorneys from our nationally recognized Consumer Class Action and Products Liability practices offer a real-time assessment of the developments in matters that are shaping the industry. This blog examines the full spectrum of consumer-related class action and product liability lawsuits ranging from false advertising, privacy, consumer product safety, ADA, food misbranding, TCPA, environment, retail, and government actions as well as nationwide and multidistrict litigation class actions.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Partner

Adam Hunt is a partner in the Litigation Department of Morrison Foerster’s New York office. His practice focuses on complex litigation, with an emphasis on class action and commercial litigation.

Adam Hunt

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office.Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.Alexandra has significant trial experience. She has first-chaired a one-week jury trial and second-chaired a five‑week jury trial, both involving multiple claims and witnesses. She also has extensive experience in alternative dispute resolution, representing clients at mediations, mandatory settlement conferences, and early neutral evaluations.Alexandra enjoys tracking developments and keeping her clients updated on product liability and personal injury claims, frequently writing or presenting on emerging areas such as autonomous vehicles and smart devices. Alexandra’s experience also extends to professional liability, warranty claims, eminent domain, and construction law.Alexandra earned her J.D. from the University of San Diego School of Law. While in law school, the San Diego Law Review published her comment on the recovery of damages by plaintiffs in a persistent vegetative state, and she also served as a comment editor. She received her B.A. from the University of California, Los Angeles, where she majored in Political Science and minored in Spanish. A San Diego native, she attended a Spanish immersion school through the eighth grade. Alexandra is active in the San Diego community, advising students at a local college. She is also a member of several legal organizations in San Diego, including Lawyer’s Club, the Association of Business Trial Lawyers, and Wallace Inn of Court.

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Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra’s litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, automobiles, AI, and robotics. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow

<div class="videoWrapper"><iframe frameborder="0" class="sticky-video" allowfullscreen="1" title="Meet Penny Preovolos, Litigation Partner" src="https://www.youtube-nocookie.com/embed/hv7hYn-Bl7c?rel=0&showinfo=0;vq=hd1080" title="iframe"></iframe></div>Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products. According to Chambers USA, Penelope has a “great reputation for antitrust and product liability work” and is a “superb all-around antitrust lawyer.”Penelope was named the 2019 Antitrust Lawyer of the Year by the Antitrust, UCL, and Privacy Section of the California Lawyers Association. She was co-chair of MoFo’s antitrust practice for 14 years. She has served as chair of the Antitrust and Trade Regulation Section of the State Bar of California and as a member of the Ninth Circuit Advisory Committee on Local Rules and Operations. She is an editor of and frequent contributor to Morrison & Foerster’s <a href="https://classdismissed.mofo.com/">Class Dismissed blog</a>, as well as a frequent speaker about class action and antitrust issues.More About PenelopePenelope clerked for the Honorable Charles M. Merrill, United States Court of Appeals for the Ninth Circuit. She graduated cum laude from Harvard Law School, where she was executive editor of the Harvard Civil Rights – Civil Liberties Law Review. Penelope was a member of Phi Beta Kappa at the University of California, Berkeley. She was awarded the University Medal, the highest undergraduate honor at the university, as well as the English Departmental Citation (awarded to the outstanding graduate in that department).

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Senior Counsel

Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products.

Penelope A. Preovolos

Zak is an associate in the Litigation Department in Morrison Foerster’s New York office.Zak’s practice focuses on class actions, commercial litigation, white collar defense, government investigations, and antitrust litigation and counseling. He has represented clients before federal and state courts in complex commercial matters, as well as in arbitration tribunals.Zak received his J.D. from New York University School of Law in 2018, where he was inducted into the Order of the Barristers. During law school, Zak also served as the Marden executive editor for the NYU Law Moot Court Board. In 2013, Zak received his B.A. and M.A. in political science from Yale University, receiving honors in his major and the Ellsworth Prize for Best Senior Essay in the Social Sciences.

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Associate

Zak Newman

Mitchell A. Hokanson is an associate in the Litigation Department of Morrison Foerster’s San Diego office.Mitchell’s practice focuses on commercial litigation and consumer class actions. He has extensive experience with civil litigation, including managing day-to-day strategy, propounding and responding to discovery, taking and defending depositions, and engaging in motion practice. He also has experience providing regulatory advice to clients, including pro bono partners and multinational corporations. Mitchell maintains an active pro bono practice.After law school, Mitchell worked as a judicial clerk for Justice Susan M. Carney of the Alaska Supreme Court, where he drafted bench memoranda and opinions on a wide range of state and federal law topics. Prior to joining MoFo, Mitchell worked for another international law firm, where he was a member of the Complex Civil Litigation practice group, in Los Angeles, California.Mitchell received his J.D. from Columbia Law School, where he was honored as a James Kent Scholar and Harlan Fiske Stone Scholar. While in law school he was the senior executive editor of the Columbia Journal of Environmental Law and worked as a judicial intern for Judge Sandra S. Ikuta of the United States Court of Appeals for the Ninth Circuit and Judge George B. Daniels of the United States District Court, Southern District of New York. Prior to that, Mitchell earned his B.A. from Stanford University.

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Mitchell Hokanson

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FDA Seeks to Phase Out Synthetic Color Additives

Client Alert: Jury Returns Verdict in “Manufactured in the USA” False Advertising Case

ICPHSO 2025: CPSC at ICPHSO

ICPHSO 2025: State Regulation in Response to Trump’s Push for Federal Deregulation

Everyone Please Stand: Supreme Court to Consider Standing Requirements for Class Actions, With the Potential to Resolve Long-standing Multi-circuit Split.

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Barr v. Am. Ass’n of Political Consultants, Inc., 2020 WL 3633780, 591 U.S. __ (2020).[1]Earlier this month, the Supreme Court held, in a fractured decision yielding multiple concurring or dissenting opinions, that the 2015 government-debt exception to the Telephone Consumer Protection Act (the TCPA) permitting robocalls to cellphones solely to collect a debt owed to or guaranteed by the United States violated the First Amendment, affirming the Fourth Circuit’s decision. Id. at *2. Applying traditional severability principles, seven Justices concluded that, rather than invalidate the entire TCPA, the 2015 government-debt exception must be severed from the remainder of the statute. Id. The bottom line: the government-debt exception is gone; the rest of the TCPA remains.Questions Before the Supreme Court<ul><li>Is the government debt exception to the robocall ban to cell phones unconstitutional? YES</li><li>Is the exemption a content-based restriction requiring strict scrutiny? YES</li><li>If so, is severing the exemption from the TCPA the appropriate remedy? YES</li></ul>ReasoningThe initial question before the Court in its First Amendment analysis was whether the robocall restriction, with the government-debt exception, is content-based. Id. at *5. The Court answered in the affirmative because the law favored speech made for collecting government debt over political and other speech. Id. at *5. The Court rejected the government’s arguments that the TCPA drew distinctions based on speakers rather than content, that the legality of a robocall depends on whether a caller is engaged in a particular economic activity, not its content, and that if the TCPA is content-based, so are debt collection statutes. Id. Applying Reed, the Court reasoned that, because the government-debt exception is content-based, it is subject to strict scrutiny. Id. at *6 (citing Reed v. Town of Gilbert, 576 U. S. 155, 163 (2015)). The Government conceded that it could not satisfy strict scrutiny to justify the differentiation between government-debt collection speech and other categories of robocall speech, such as political speech, charitable fundraising, issue advocacy, commercial advertising, etc., and the Court agreed. Id.Having concluded that the 2015 government-debt exception created an unconstitutional exception to the TCPA, the Court was left to decide whether to invalidate the entire statute, or instead to invalidate and sever the 2015 government-debt exception. Id. at *6. In its analysis, the Court rejected plaintiffs’ broader argument that the entire TCPA is unconstitutional. Plaintiffs argued that, because Congress was willing to carve out an exception for government debt, its credibility regarding an interest in privacy was undermined. Id. at *6–7. The Court reasoned, however, that “Congress’s continuing broad prohibition of robocalls amply demonstrates Congress’s continuing interest in consumer privacy.” Id. at *7.The Court ultimately determined that it must invalidate the 2015 government-debt exception and sever that exception from the remainder of the statute. Id. at *11. The Court relied on the text of the Communications Act’s severability clause and the presumption of severability. Id. The majority disregarded Justice Gorsuch’s suggestion that the decision provided “no relief” to plaintiffs, reasoning that invalidating and severing the government-debt exception properly addressed the unequal treatment underlying plaintiffs’ claim. Id. at *13. The Court noted that Justice Gorsuch’s remedy would result in harm to “tens of millions of consumers who would be bombarded every day with nonstop robocalls notwithstanding Congress’s clear prohibition of those robocalls.” Id.Justice Sotomayor concurred in the judgment, yet reasoned that strict scrutiny should not apply to all content-based distinctions. Id. at *14. However, she concluded that the government-debt exception still failed intermediate scrutiny because it is not “narrowly tailored to serve a significant governmental interest.” Id.Justice Breyer, with whom Justices Ginsburg and Kagan joined, concurred in the judgment with respect to severability and dissented in part. Id. at *14. Justice Breyer disagreed that the exception violates the First Amendment. Id. He reasoned that strict scrutiny was inappropriate and that intermediate scrutiny should apply. Id. at *15. Justice Breyer reasoned that not all content-based distinctions are subject to strict scrutiny regardless of context or practical effect. Id. at *19. He did agree, however, with Justice Kavanaugh’s conclusion that the provision is severable. Id.Justice Gorsuch, with whom Justice Thomas joined in part, concurred in the judgment in part and dissented in part. Justice Gorsuch agreed with Justice Kavanaugh that the government-debt exception violates the First Amendment. Id. at *19–20. However, he disagreed as to why and the remedial consequences. Id. at *20. Justice Gorsuch agreed that the exception is a content-based restriction that fails strict scrutiny, but reasoned that plaintiffs are entitled to an injunction precluding TCPA enforcement against them. Id. at *21.TakeawaysAlleged TCPA violations are the basis of an increasing number of lawsuits each year, and the statute appears to be here to stay.Because the TCPA is heavily litigated and lacks a statutory limitation or cap on the amount of damages that can be awarded for each violation, it can lead to tens of millions of dollars in potential exposure. Therefore, companies seeking to reduce their exposure to TCPA litigation should consult a legal professional for advice on compliance and mitigation of litigation risk.Morrison & Foerster has advised extensively on TCPA disputes and represented numerous Fortune 500 companies in TCPA litigation. Follow Morrison & Foerster’s Class Dismissed blog to stay informed on TCPA developments.[1] Morrison & Foerster filed an amicus brief in this case.

CCPA and Data Breach Class Action for Leading Software Company

BIPA Class Action Against Gaming and Hospitality Company

TCPA and Other Class Actions for Major Technology Company

Data Breach Class Action for Technology Company

Wiretap Act action against a Major Consumer Electronics Manufacturer

TCPA Class Action Against National Chain

In re Pharmaceutical Industry Average Wholesale Price Litigation

In re Verizon Wireless Data Charges Litigation

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Clients seek out Tiffany for her successful track record in defending class action claims on behalf of clients in a broad range of industries, including technology, healthcare, and consumer product companies. She represents numerous Fortune 500 companies in high-stakes litigation involving privacy and marketing claims in courts throughout the United States.

Tiffany Cheung

Clients seek out Tiffany for her successful track record in defending class action claims on behalf of clients in a broad range of industries, including technology, healthcare, and consumer product companies. She represents numerous Fortune 500 companies in high-stakes litigation involving privacy and marketing claims in courts throughout the United States.

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Tiffani B. Figueroa is a partner in the Litigation Department and is based in Morrison Foerster’s New York office. Her practice focuses on complex litigation, with an emphasis on class action and commercial litigation.

Tiffani B. Figueroa

Tiffani Figueroa

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Federally-Backed Debt Collection Exception Not the Supreme Court’s Cup of T(CPA)

Federally-Backed Debt Collection Exception Not the Supreme Court’s Cup of T(CPA)

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Barr v. Am. Ass’n of Political Consultants, Inc., 2020 WL 3633780, 591 U.S. __ (2020).[1] Earlier this month, the Supreme Court held, in a fractured decision yi

Class action claims have taken on a new twist in the wake of COVID-19. Already, the global pandemic has generated litigation across a broad swath of areas, including privacy, data security, and consumer, among others. To date, hundreds of business lawsuits related to the pandemic are pending, with dozens more filed weekly. According to the U.S. Chamber of Commerce Litigation Center, activity to date is only the “tip of the iceberg.” Per Steven Lehotsky, chief counsel for the Chamber Litigation Center, businesses can expect more “opportunistic class action lawsuits down the road.” In this alert, we provide an overview of the first wave of pandemic-related class action litigation trends and project what businesses should expect next.First wave of COVID-related class actions Privacy and data security litigation. Among the first cases filed related to the pandemic were a variety of privacy and data security related class actions. Plaintiffs focused on companies that now have a spotlight on them due to increased usage during shelter-in-place orders. Across the technology industry, a variety of online services are <a href="https://hbr.org/2016/04/blitzscaling">blitzscaling</a>—or rapidly growing—based on skyrocketing demand from consumers for food delivery, e-commerce, and virtual social connections. In California, in particular, the pandemic coincided with the California Consumer Privacy Act (CCPA) coming into force on January 1, 2020. Despite some calls to delay enforcement in light of COVID-19, California’s Attorney General plans to begin enforcing the law starting July 1, 2020 as planned. AG Xavier Bacerra’s office <a href="https://iapp.org/news/a/making-sense-of-calls-to-delay-ccpa-enforcement-amidst-covid-19/">has stated</a>, “We encourage businesses to be particularly mindful of data security in this time of emergency.”Telephone Consumer Protection Act (TCPA). TCPA cases continue to be active as COVID-19 issues have emerged. MoFo’s Class Dismissed blog recently <a href="https://classdismissed.mofo.com/tcpa/text-messaging-in-a-time-of-covid-19-fcc-guidance-on-emergency-messages-and-restrictions-on-telemarketing-in-new-york/">reviewed </a>the March 20, 2020 FCC Declaratory Ruling allowing certain calls for “emergency purposes” amidst the pandemic. That does not mean, however, that there is a blanket exemption from the TCPA’s rules governing certain calls and messages, and multiple TCPA lawsuits have been filed involving coronavirus-related communications. In a case filed in late April, the Texas Attorney General sued two parties for alleged violations of the TCPA and the Texas state law corollary. Specifically, the lawsuit alleges that a marketing service advertised health benefit plans by stating that they “include coronavirus testing and treatment.” <a href="https://www.courtlistener.com/recap/gov.uscourts.azd.1238468/gov.uscourts.azd.1238468.1.0.pdf">Another lawsuit</a>, filed by private plaintiff attorneys in Florida in March 2020, alleges that a golf course company sent text messages referencing COVID-19, stating “Stay safe in these crazy times by golfing at top 100 courses[.]”Beyond privacy, data security, and TCPA, class actions in other consumer areas have seen an uptick across the board.Health claims from shutting down too late. Multiple cases filed against cruise lines, for example, assert claims that cruise ships improperly continued operations despite allegedly knowing that passengers were showing symptoms of COVID-19.[1]Cancellation and refund claims. As businesses have been forced to shutter in response to the pandemic, plaintiffs have filed a slew of class actions alleging claims related to recurring membership charges and refunds. Multiple cases throughout the country have targeted gyms, levying causes of action for breach of contract and consumer protection laws.[2] Travel and vacation-related businesses have also been in the cross-hairs. Resorts, airlines, and vacation destinations—and even online event businesses—are facing a variety of class actions alleging claims such as unjust enrichment, fraudulent misrepresentation, conversion, and breach of contract.[3] Nor have educational institutions been spared. As schools moved classes online, lawsuits have been filed seeking reimbursement for room and board and reimbursement for the lost benefits of in-person education.[4]False advertising related to health benefits. With hundreds of millions of Americans suddenly seeking to stock up on supplies such as hand sanitizers, sellers of such products have been faced with scrutiny both from federal law enforcement officials (<a href="https://www.mofo.com/resources/insights/200416-law-enforcement-covid-19.html">covered</a> in a recent alert by MoFo’s national security and crisis group) as well as private plaintiff attorneys.[5]Insurance litigation. Insurance companies face a litany of lawsuits relating to denial of coverage for business interruption, as insurers have claimed in some instances that losses caused by COVID-19 are excluded from coverage. Plaintiffs such as restaurants, bakeries, dental practices, and others forced to shutter have filed cases. One group including several well-known restaurateurs such as Wolfgang Puck, Daniel Boulud, and Dominique Crenn, has banded together to create the Business Interruption Group (BIG), whose <a href="https://werbig.org/">website </a>promises to “bring BIG legal action in every state” against insurers.Financial services institutions. Banks across America have moved rapidly to participate in the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) Paycheck Protection Program (PPP), helping small businesses procure funding to maintain jobs during state-ordered shutdowns. Many of these institutions now face lawsuits related to eligibility and processing for PPP loans, as well as disputes over commercial loans and foreclosures. As with the TCPA, state AGs have gotten involved here, too. Arizona’s AG, for instance, in mid-March 2020 sent a <a href="https://www.azag.gov/sites/default/files/2020-03/Letter%20to%20Financial%20Institutions%20and%20Lending%20Institutions%20Serving%20Arizonans_3_19_2020.pdf">letter </a>to over 1,000 financial institutions requesting a suspension of foreclosures, repossessions, and evictions for a certain amount of time, as well as waivers for late fees and default interest for credit card account holders.Securities cases. Plaintiff attorneys have aimed their sights at securities litigation as well—bringing cases against companies whose stock prices have fallen alongside broader market volatility. Theories range from false and misleading statements minimizing the pandemic’s impact on a company’s business, to alleged false claims based on developments of treatments or vaccines.[6] MoFo’s Coronavirus Task Force has been following <a href="https://www.mofo.com/resources/insights/200505-us-sec-staff-issues.html">recent U.S. Securities and Exchange Commission guidance</a> for companies in this area.Policy advocacy in the wake of COVID-19 litigationAs the first wave of pandemic-related cases works its way through the pleading stages of litigation, advocates are simultaneously working to influence litigation policy as well.These efforts have already resulted in various liability limitations at multiple levels of government. At the federal level, the CARES Act contains certain liability protections for respirator manufacturers that have had to ramp up research, development, and distribution efforts. The U.S. Department of Health and Human Services has also provided guidance on tort liability immunity granted under the Public Readiness and Emergency Preparedness Act (the “PREP Act”), as <a href="https://classdismissed.mofo.com/fda/hhs-guidance-broadens-prep-act-immunity-tightens-focus-on-public-private-cooperation/">discussed </a>by our colleagues in MoFo’s Class Dismissed blog. Many states too have instituted liability protections for certain healthcare industries and medical facilities.[7]Others, meanwhile, have attempted to leverage the pandemic to advance policy goals related to challenging pre-dispute arbitration agreements. As documented by the Institute for Legal Reform, early drafts of COVID-19 relief bills in the U.S. House and Senate, as a result, contained provisions aimed at invalidating arbitration clauses in disputes about business loans and employee sick leave, among other topics.Wave two: What to expect from the next set of COVID-19 related lawsuits Wave one of pandemic class action litigation has crashed ashore. The next wave may not be far behind. In the privacy and data security arena, we expect to see more cases. The FBI, DOJ, and international law enforcement agencies have warned of unprecedented criminal hacking activity in the wake of the pandemic. There have been reports that attackers have successfully lurked in a company’s infrastructure before discovery, sometimes for weeks or even months. Given this, the ongoing surge in COVID-19 related hacking activity is likely to result in publicly revealed data breaches in the coming months. Such breaches may trigger class actions under the CCPA’s private right of action, discussed <a href="https://www.cpomagazine.com/data-protection/anticipating-ccpa-litigation-in-2020-steps-to-take-now/">here</a>, among other state data breach and notice statutes.Other privacy lawsuits will stem from implementation of biometric track and trace technology. Illinois’ biometric privacy statute, the Biometric Information Privacy Act (BIPA)—already a source of frequent litigation—will continue to be the focus of new class actions. Similar statutes, some creating even greater exposure, are being contemplated in states such as <a href="https://lis.virginia.gov/cgi-bin/legp604.exe?201+sum+HB1215&201+sum+HB1215">Virginia</a>. To facilitate virus response and containment, organizations will look towards pooling data and leveraging anonymized datasets to perform epidemiological studies. Given advancements in de-anonymization and disaggregation technologies, this may lead to the filing of creative and new privacy claims.Just as a series of class actions arose from pandemic-related shutdowns, so too will lawsuits come as communities begin to re-open towards a new normal. Litigation around compliance with government guidelines, negligence causes of action related to safety measures, lawsuits around COVID-19 treatments, newly developed personal protective equipment and other products, and claims around social distancing implementation appear to be on the horizon. As noted above, lawmakers and regulators are keenly aware of such litigation risk and may attempt to support reopening by crafting or expanding safe harbors.How should businesses shore up in the face of the COVID-19 class action litigation wave? Morrison & Foerster’s Class Action + Mass Torts Group and Coronavirus Task Force have advised and represented many clients on emerging claims related to COVID-19. MoFo’s Litigation team routinely helps companies prepare for and respond to litigation risks including matters involving the CCPA, TCPA, BIPA, and other consumer causes of action that are being explored in this new pandemic environment. To stay a step ahead, our team has been analyzing newly filed lawsuits as well as COVID-19 publications and trends. For new products, incorporating risk analysis up front in the design process is vital. Particularly around issues of privacy and data security, organizations should be mindful of notice, consent, and other statutory and regulatory issues—especially in the areas of biometrics and data analytics. As always, organizations will benefit from strong contracts, clear representations in public facing policies, and careful consideration as to pre-dispute arbitration clauses. More time at home has not slowed down the pursuit of class action lawsuits or the need for thoughtful compliance practices.[1] See, e.g., Turner v. Costa Crociere SPA, No. 20-cv-21481 (S.D. Fla. Apr. 7, 2020); Archer v. Carnival Corporation, et al., No. 20-cv-02381 (N.D. Cal. Apr. 8, 2020).[2] See, e.g., Namorato v. New York Sports Clubs, No. 20-cv-02580 (S.D.N.Y. Mar. 26, 2020); Barnett v. Fitness International, LLC, No. 0:20-cv-60658 (S.D. Fla. Mar. 30, 2020); Delvecchio v. Boston Sports Clubs, No. 20-cv-10666 (D. Mass. Apr. 5, 2020).[3] See, e.g., McMillan v. StubHub, No. 20-cv-00319 (W.D. Wis. Apr. 2, 2020); Rutledge v. Do LaB Inc. (Cal. Super. Ct. Mar. 24, 2020); Ruiz v. Magic Mountain LLC, et al., No. 2:20-cv-03436 (C.D. Cal. Apr. 13, 2020); Carisi v. Events and Adventures California, No. 3:20-cv-02260 (N.D. Cal. Apr. 2, 2020).[4] See, e.g., Rosenkrantz, et al. v. Arizona Board of Regents, 2:20-cv-00613 (D. Ariz.); Rickenbaker, et al. v. Drexel University, 2:20-cv-01358 (D. S.C.); Student A, et al. v. Liberty University, 6:20-cv-00023 (W.D. Va.); Church, et al. v. Purdue University, et al., 4:20-cv-00025 (N.D. Ind.); Dixon, et al. v. University of Miami, 2:20-cv-01348 (D. S.C.).[5] See, e.g., David v. Vi-Jon, Inc. dba Germ-X, No. 20-cv-99999 (S.D. Cal. Mar. 5, 2020); Gonzalez v. Gojo Indus., Inc., No. 1:20-cv-888 (S.D.N.Y. Feb. 1, 2020).[6] Douglas v. Norwegian Cruise Lines, No. 20-cv-21107 (S.D. Fla. Mar. 12, 2020); Atachbarian v. Norwegian Cruise Lines et al., No. 1:20-cv-21386 (S.D. Fla. Mar 31, 2020); McDermid v. Inovio Pharmaceuticals, Inc., No. 20-cv-01402 (E.D. Pa. Mar. 12, 2020).[7] Arizona Executive Order No. 2020-27 (Mar. 11, 2020); Arkansas Executive Order No. 18 (Apr. 14, 2020); Connecticut Executive Order No. 7V (Apr. 7, 2020); Georgia Executive Order No. 04.14.20.01 (Apr. 14, 2020); Illinois Executive Order No. 19 (Apr. 1, 2020); Indiana Executive Order No. 13 (Mar. 6, 2020); Michigan Executive Order No. 30 (2020); New Jersey Executive Order No. 112 (Apr. 1, 2020); New York Executive Order No. 202.10 (Mar. 23, 2020); North Carolina Executive Order No. 130 (Apr. 8, 2020).

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Class Action Litigation in the Wake of COVID-19

Using Waivers to Curb COVID-19 Legal Exposure

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Class action claims have taken on a new twist in the wake of COVID-19. Already, the global pandemic has generated litigation across a broad swath of areas, incl

Class Action Litigation in the Wake of COVID-19

On April 7, 2020, the Second Circuit Court of Appeals vacated a district court’s decision granting summary judgment to a defendant in a TCPA class action and deepened a split among federal courts by holding that the systems the defendant used to send text messages were Automatic Telephone Dialing Systems (“ATDSs”) under the Telephone Consumer Protection Act (“TCPA”). In Duran v. La Boom Disco, Inc., No. 19-600-cv (2d Cir. Apr. 7, 2020), the Second Circuit interpreted the two concurrent “capacities” that are necessary for a dialing system to qualify as an ATDS under the TCPA<a href="#_ftn1" name="_ftnref1">[1]</a> and concluded that:<ul><li>A dialing system that stores a list or database of telephone numbers that was generated and uploaded to the system by humans may be considered an ATDS.</li><li>An ATDS requires the capacity to “dial” telephone numbers automatically—e. without human intervention. However, a person clicking “send” to distribute the calls or text messages is not sufficient human intervention and such a system may be considered an ATDS.</li></ul>In reaching these conclusions, the Second Circuit followed the Ninth Circuit’s decision in Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018), in contrast to Seventh, Eleventh, and Third Circuits, which held that an ATDS cannot make calls from stored lists. Accordingly, defendants in TCPA actions can no longer argue that the Ninth Circuit is the black sheep among federal courts of appeals on the critical autodialer issue. And the Second Circuit likely will become the new favorite jurisdiction among TCPA plaintiffs’ lawyers.Background of the Case: A Party-Pooping PlaintiffIn 2016, plaintiff Radames Duran (“Duran”) voluntarily texted a code to a phone number maintained by defendant La Boom Disco (“LBD”), a nightclub, to gain free admission to a party. From that point on, LBD maintained Duran’s telephone number on a list and would send him numerous text messages each month.<a href="#_ftn2" name="_ftnref2">[2]</a> In 2017, Duran filed a class-action complaint alleging that he received “unsolicited and unconsented-to” text messages from LBD in violation of the TCPA.On summary judgment, LBD conceded that it sent the text messages to Duran, but argued that it did not violate the TCPA because the systems it used to send the messages, ExpressText and EZ Texting Programs, were not covered by the statute. The district court held that the systems’ reliance on a database of numbers, rather than a random or sequential number generator, did not disqualify them from TCPA coverage. See Duran v. La Boom Disco, Inc., 369 F. Supp. 3d 476, 490 (E.D.N.Y. 2019). But the district court held that the systems were not an ATDS because they required too much human intervention when dialing. Specifically, the district court concluded that “because a user determines the time at which [the systems] send messages to recipients, they operate with too much human involvement to meet the definition of an [ATDS].” Id. at 492. Duran appealed the district court’s decision.The Second Circuit Crashes the PartyAn ATDS Can Make Calls from a Stored ListThe first issue before the Second Circuit was whether the systems had the “capacity . . . to store or produce telephone numbers to be called, using a random or sequential number generator.” Both parties agreed that humans generated the telephone numbers and uploaded them to LBD’s systems. The Second Circuit acknowledged a circuit split as to whether a system that pulls numbers from a stored list when it automatically dials is an ATDS, or whether the system must randomly or sequentially generate those numbers to qualify as an ATDS. The Seventh, Eleventh, and Third Circuits have all held that systems lacking the capacity to randomly or sequentially generate numbers do not constitute an ATDS because they only dial telephone numbers from lists that had been generated and uploaded by humans.<a href="#_ftn3" name="_ftnref3">[3]</a> By contrast—in what was once an outlier decision—the Ninth Circuit held that systems that call numbers from a list or database uploaded by humans fall under the statutory definition of an ATDS because the clause requiring the use of “a random or sequential number generator” modifies only the verb “produce” in the statute, but not the word “store.” Thus, under the Ninth Circuit’s holding, only the numbers that are “produced” are required to be randomly or sequentially generated. The Second Circuit followed the Ninth Circuit and held because the systems that LBD used “stored” the lists of numbers was enough for them to qualify as an ATDS.The Second Circuit reasoned that its interpretation of the statute was supported by the rule against surplusage, the structure and purpose of the TCPA, and the prior guidance from the Federal Communications Commission (“FCC”). Agreeing with the Ninth Circuit, the Second Circuit noted that its holding avoids rendering the word “produce” redundant by giving it an independent significance from the word “store,” i.e. differentiating between a system that can store numbers of all kinds and one that can produce numbers in a particular way (randomly or sequentially). Next, the Second Circuit observed that the TCPA allows an ATDS to be used “to collect a debt owed to or guaranteed by the United States.” As Congress did not authorize the use of stored lists only for this exception, it must have intended to allow ATDSs to store lists of human-generated numbers generally. Finally, the Second Circuit looked to the 2003, 2008, and 2012 FCC Orders as persuasive authority.<a href="#_ftn4" name="_ftnref4">[4]</a> The Second Circuit found that the FCC suggested that the TCPA should be interpreted broadly so that the statute’s prohibitions maintain their deterrent effect.Human Intervention: Clicking “Send” Is Not the Same as “Dialing”The second issue before the Second Circuit was whether the systems had the “capacity . . . to dial such numbers.” The Second Circuit analyzed how much human intervention is tolerable under the statute before an ATDS becomes a non-ATDS and found that the district court erred in finding the human intervention analysis turned solely on the timing factor. Instead, the Second Circuit held that the key factor in the analysis is whether the systems had the ability to “dial” automatically, i.e. without human intervention. The Second Circuit held that clicking “send” or some similar button—like flipping an “on” switch—is not the same thing as dialing, “since it is not the actual or constructive inputting of numbers to make an individual telephone call or to send an individual text message.” According to the Second Circuit, to hold otherwise would undermine Congress’s ultimate purpose in passing the TCPA because any dialing system presumably requires some sort of human operation at some point in the process. In anticipation of future arguments concerning calls made using smartphones, the Second Circuit included a lengthy footnote explaining that its holding does not “unintentionally define all smartphones as ATDSs,” because clicking on a name in a smartphone digital phonebook is a “form of speed‑dialing or constructive dialing that is the functional equivalent of dialing by inputting numbers.”Takeaways  <ul><li>Duran deepens the circuit split on the “random or sequential number generator” requirement for ATDSs under the TCPA. Now that the Second Circuit has followed the Ninth Circuit’s precedent in Marks, it is possible that other circuits may adopt the same approach.</li><li>Duran expands potential TCPA liability in the Second Circuit in two respects: <ul><li>A dialing system that stores a list or database of telephone numbers but does not produce those numbers from a “random or sequential number generator” may be considered an ATDS; and</li><li>A dialing system where human interaction is limited to clicking “send” or a similar button may be considered an ATDS.</li></ul></li><li>Until the FCC or the Supreme Court weighs in on these issues, there will continue to be confusion and inconsistent holdings on the ATDS issue among district courts that are not in the Second, Ninth, Seventh, Eleventh, or Third Circuits.</li></ul><a href="#_ftnref1" name="_ftn1">[1]</a> To qualify as an ATDS, a dialing system must have both the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator[,]” 47 U.S.C. § 227(a)(1)(A), and the capacity “to dial such numbers[,]” id. § 227 (a)(1)(B).<a href="#_ftnref2" name="_ftn2">[2]</a> Duran alleged he received somewhere near 300 text messages, while LBD argued it only sent him around 121 text messages.<a href="#_ftnref3" name="_ftn3">[3]</a> See Gadelhak v. AT&T Servs., Inc., 950 F.3d 458 (7th Cir. 2020); Glasser v. Hilton Grand Vacations Co., 948 F.3d 1301 (11th Cir. 2020); Dominguez v. Yahoo, Inc., 894 F.3d 116 (3d Cir. 2018).<a href="#_ftnref4" name="_ftn4">[4]</a> The Second Circuit noted that its decision in King v. Time Warner Cable Inc., 894 F.3d 473 (2d Cir. 2018) and the D.C. Circuit’s decision in ACA International v. Federal Communications Commission, 885 F.3d 687 (D.C. Cir. 2018) did not invalidate the 2003, 2008, and 2012 FCC Orders.

Adam Hunt is a partner in the Litigation Department of Morrison Foerster’s New York office. His practice focuses on complex litigation, with an emphasis on class action and commercial litigation.

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Michael Ahern is an associate in the Litigation Department of Morrison Foerster’s New York office.
Prior to joining Morrison Foerster, Mr. Ahern clerked for the Honorable Eileen Bransten in the Comm

Michael G. Ahern

Michael Ahern

More Autodialer Confusion: Second Circuit Decision Deepens Circuit Split

On April 7, 2020, the Second Circuit Court of Appeals vacated a district court’s decision granting summary judgment to a defendant in a TCPA class action and de

More Autodialer Confusion: Second Circuit Decision Deepens Circuit Split

With nearly half of the United States population being either urged or ordered to stay at home and avoid all non-essential travel in light of the COVID-19 crisis, modern forms of communication such as telephone calls, video chat, and, of course, text messaging, are providing critical connections between business and consumers. Indeed, businesses may be looking for ways to reach consumers with information about inventory, shipment status, and other issues related to an increase in demand for all the things that people need to “shelter-in-place”—from groceries to yoga mats.Businesses by now know that calling or sending text messages to consumers is fraught with risk in light of the Telephone Consumer Protection Act (“TCPA”), which carries stiff statutory penalties and is a favorite tool of the class action plaintiffs’ bar. For the uninitiated, the TCPA regulates:  1) “autodialed, prerecorded, or artificial voice calls” to wireless telephone numbers, including text messages, without the prior express consent of the called party;<a href="#_ftn1" name="_ftnref1">[1]</a> and 2) artificial or prerecorded voice calls to residential telephone numbers without the prior express consent of the called party.<a href="#_ftn2" name="_ftnref2">[2]</a> In reviewing call or text message campaigns for TCPA compliance in light of the COVID-19 crisis, however, eagle-eyed readers may have noticed that the TCPA exempts from liability calls and messages that are made for “emergency purposes.”<a href="#_ftn3" name="_ftnref3">[3] </a>But as the FCC recently clarified in a March 20 Declaratory Ruling, although the TCPA exempts calls made for “emergency purposes,” that exemption is very narrow and applies only in very specific circumstances.<a href="#_ftn4" name="_ftnref4">[4]</a>The FCC’s rules provide that “calls made necessary in any situation affecting the health and safety of consumers” qualify as calls for “emergency purposes.”<a href="#_ftn5" name="_ftnref5">[5]</a> And in its March 20 Declaratory Ruling, the FCC acknowledged that “the current pandemic constitutes such an imminent health risk to the public.”<a href="#_ftn6" name="_ftnref6">[6]</a> But the FCC determined that only “certain callers may lawfully make automated calls and send automated text messages to wireless telephone numbers when such calls are necessary to protect the health and safety of citizens pursuant to the TCPA’s ‘emergency purposes’ exception.”<a href="#_ftn7" name="_ftnref7">[7]</a> Specifically, the FCC ruled that in order for the “emergency purposes” exception to apply, the calls or messages at issue must be:  1) made by hospital, healthcare provider, state or local health official, or other government official; and 2) “solely informational, made necessary because of the COVID-19 outbreak, and directly related to the imminent health or safety risk arising out of the COVID-19 outbreak.”<a href="#_ftn8" name="_ftnref8">[8]</a> Thus, “calls that contain advertising or telemarketing” do not qualify for the exception, even if the goods or services being offered may be critical for consumers who face travel restrictions.<a href="#_ftn9" name="_ftnref9">[9]</a> The FCC specifically stated that calls “advertising a commercial grocery delivery service, or selling or promoting health insurance, cleaning services, or home test kits” are not exempt from the TCPA.<a href="#_ftn10" name="_ftnref10">[10]</a> Accordingly, business should remain vigilant in all aspects of their TCPA compliance programs, despite the national emergency.One final note:  businesses must also be mindful about navigating individual state laws and emergency provisions governing telemarketing in the current environment. For example, last year, New York State passed legislation prohibiting “unsolicited telemarketing sales call to any person in a county, city, town or village under a declared state of emergency.”<a href="#_ftn11" name="_ftnref11">[11]</a> On March 7, 2020, Governor Cuomo declared a state of emergency. So, although New York law permits certain unsolicited telemarketing calls made during specific hours, and with required disclosures,<a href="#_ftn12" name="_ftnref12">[12]</a> while the state of emergency is in effect—currently until September 7, 2020<a href="#_ftn13" name="_ftnref13">[13]</a>— all unsolicited telemarketing calls in New York are prohibited. Companies therefore should remember that telemarketing call compliance does not end with the TCPA; it requires a multistate approach.<a href="#_ftnref1" name="_ftn1">[1]</a> See In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, DA 20-318 (March 20, 2020) (the “March 20 Declaratory Ruling”); 47 U.S.C. § 227(b)(1)(A).<a href="#_ftnref2" name="_ftn2">[2]</a> 47 U.S.C. § 227(b)(1)(B).<a href="#_ftnref3" name="_ftn3">[3]</a> See 47 U.S.C. § 227(b)(1)(A), (b)(1)(B).<a href="#_ftnref4" name="_ftn4">[4]</a> See March 20 Declaratory Ruling.<a href="#_ftnref5" name="_ftn5">[5]</a> See 47 CFR § 64.1200(f)(4).<a href="#_ftnref6" name="_ftn6">[6]</a> See March 20 Declaratory Ruling.<a href="#_ftnref7" name="_ftn7">[7]</a> Id.<a href="#_ftnref8" name="_ftn8">[8]</a> Id.<a href="#_ftnref9" name="_ftn9">[9]</a> Id.<a href="#_ftnref10" name="_ftn10">[10]</a> Id.<a href="#_ftnref11" name="_ftn11">[11]</a> N.Y. G.B.L. § 399-z(5-a).<a href="#_ftnref12" name="_ftn12">[12]</a> See NY G.B.L. §§ 399-p(2), 399-z(2).<a href="#_ftnref13" name="_ftn13">[13]</a> <a href="https://www.governor.ny.gov/news/no-202-declaring-disaster-emergency-state-new-york">https://www.governor.ny.gov/news/no-202-declaring-disaster-emergency-state-new-york</a>.

Text Messaging in a Time of COVID-19: FCC Guidance on “Emergency Messages” and Restrictions on Telemarketing in New York

With nearly half of the United States population being either urged or ordered to stay at home and avoid all non-essential travel in light of the COVID-19 crisi

Text Messaging in a Time of COVID-19: FCC Guidance on “Emergency Messages” and Restrictions on Telemarketing in New York

On January 10, 2020, the Supreme Court granted certiorari to review the Fourth Circuit’s decision to strike the Telephone Consumer Protection Act’s (TCPA) “government-debt exemption.” See Am. Ass’n of Political Consultants, Inc. v. FCC, 923 F.3d 159 (4th Cir. 2019). Because this federal statute is heavily litigated, the Court’s decision may have a significant impact on federal dockets.The TCPA was enacted in 1991 to impose certain requirements regarding the use of “automated telephone dialing systems” (ATDS) and prerecorded phone calls. § 2(10), 105 Stat. 2394. In the decades since Congress enacted the TCPA, thousands of lawsuits have been filed alleging billions in damages, and TCPA lawsuits continue to weigh heavily on the dockets of federal courts across the country. In 2015, Congress added a new exemption to the TCPA, sparking several constitutional challenges to the TCPA on First Amendment grounds. This most recent exemption permitted automated calls to be made “solely to collect a debt owed to or guaranteed by the United States”—the so-called “government-debt exemption.” Bipartisan Budget Act of 2015, Pub. L. No. 114-74 Tit. III, § 301(a)(1)(A), 129 Stat. 588. The exemption was estimated to save the government $120 million over 10 years. See Office of Mgmt. & Budget, Exec. Office of the President, Fiscal Year 2016: Analytical Perspectives of the U.S. Government 127 tbl. 11-3, 128 (2015), https://go.usa.gov/xUtw2.Fourth Circuit ChallengeThe government-debt exemption has faced scrutiny in multiple circuits. In the Fourth Circuit, challengers of the government-debt exemption—an association of political organizations (including fundraisers and pollsters)—sued the attorney general and the Federal Communications Commission (FCC) in the Eastern District of North Carolina in 2016. See Am. Ass’n of Political Consultants, Inc. v. FCC, 923 F.3d 159 (4th Cir. 2019). The challengers asserted that the government-debt exemption was a form of content-based discrimination that violated the First Amendment. The district court agreed with the challengers that strict scrutiny applied to the exemption because it was a content-based form of speech discrimination; however, the court held that the exemption was narrowly tailored to serve a compelling government interest and therefore survived strict scrutiny.The plaintiffs appealed to the Fourth Circuit. Like the lower court, the Fourth Circuit applied strict scrutiny. This time, however, the court was persuaded by the plaintiff’s assertion that the government-debt exemption was an unconstitutional violation of the First Amendment. The Fourth Circuit found the exemption was “fatally underinclusive” and opted to sever the exemption in lieu of invalidating the entire TCPA. Similarly, in June 2019, the Ninth Circuit struck down the exemption while maintaining the remainder of the TCPA. See Duguid v. Facebook, Inc., 926 F.3d 1146 (9th Cir. 2019).Supreme Court ReviewEarlier this month, the Supreme Court granted the attorney general’s petition for certiorari in the Fourth Circuit case.The potential outcomes have a range of potential impacts on the current TCPA landscape.First, the Court may overturn the Fourth Circuit. The government asserts that the Fourth Circuit was incorrect in applying strict scrutiny, arguing that the government-debt exemption “does not depend on the content of the speech at issue. Rather, it depends on the call’s economic purpose.” Brief for Petitioner at 6, Barr v. Am. Ass’n of Political Consultants, Inc., No. 18-1588 (emphasis added). In applying strict scrutiny, the Fourth Circuit reasoned that “a private debt collector could make two nearly identical automated calls to the same cell phone using prohibited technology, with the sole distinction being that the first call relates to a loan guaranteed by the federal government, while the second call concerns a commercial loan with no government guarantee.” Am. Ass’n of Political Consultants, Inc., 923 F.3d at 166. In response, the government argues that two calls “having precisely the same content” would be “treated differently . . . depending on the precise nature of the economic activity on which the caller was engaged.” Brief for Petitioner at 7-8, Barr v. Am. Ass’n of Political Consultants, Inc., No. 18-1588. If the Court agrees with the government’s argument and applies a lower level of scrutiny, the government-debt exemption has a stronger chance of surviving Supreme Court review.Second, the Court may uphold the Fourth Circuit’s decision and sever the government-debt exemption. While the government vigorously disputes the application of strict scrutiny, it agrees with the Fourth Circuit’s remedy of severability. The Fourth Circuit noted the Supreme Court’s “strong preference” for severance. See Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2018) (“[W]e do not believe Congress would have wanted the whole [Affordable Care] Act to fall” if one provision of the Act is struck down). The Fourth Circuit explained, “Congress has explicitly mandated that, if a TCPA provision is determined to be constitutionally infirm, severance is the appropriate remedy.” Am. Ass’n of Political Consultants, Inc., 923 F.3d at 171. If the Court takes this approach, its holding would be narrow and less likely to affect the broader field of TCPA litigation because the core function of the statute would remain in effect.Third, as some observers believe, the Court may invalidate the TCPA altogether, finding that the statute’s restriction on which mediums can be used for speech contravenes the First Amendment. By taking this approach, the Court would upend the entire TCPA landscape, providing a defense for companies and organizations that have faced decades of lawsuits. It would remain to be seen whether such a decision would lead to new legislation.Once again, TCPA litigation has set the stage for an important decision by the Supreme Court. See PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., 139 S. Ct. 2051 (2019) (remanding the case to the Fourth Circuit to determine if a 2006 FCC rule prohibiting unsolicited advertisements offering free goods or services was binding on the courts); see also Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016) (holding that a federal contractor did not share the government’s unqualified immunity from liability and could be sued for TCPA violations and also holding that a rejected settlement offer does not moot a plaintiff’s individual or class claims). This latest TCPA case is poised to further define the bounds of First Amendment protections in a new era of technology and communication.

Supreme Court Grants Certiorari to Review Fourth Circuit&rsquo;s TCPA Decision

Supreme Court Grants Certiorari to Review Fourth Circuit's TCPA Decision

On January 10, 2020, the Supreme Court granted certiorari to review the Fourth Circuit’s decision to strike the Telephone Consumer Protection Act’s (TCPA) “gove

Supreme Court Grants Certiorari to Review Fourth Circuit's TCPA Decision

In 1943, the United States Supreme Court considered the constitutionality of an ordinance that prohibited door knocking in Martin v. Struthers, 319 U.S. 141 (1943).  The Supreme Court, in its landmark free speech decision, concluded that the ordinance was invalid because it was in conflict with the freedom of speech and press.  The Supreme Court’s decision was clear: “Freedom to distribute information to every citizen wherever he desires to receives it is so clearly vital to the preservation of a free society that . . . it must be fully preserved.”Forty-eight years later, the Telephone Consumer Protection Act (TCPA) was passed, prohibiting, under certain circumstances, calls to a cell phone using an automatic telephone dialing system (ATDS) or artificial or prerecorded voice without the prior express consent of the called party.  The TCPA created expansive restrictions on speech in the country, and has been viewed as contrary to the Supreme Court’s instruction in Martin to preserve the freedom to distribute information to every citizen.  And the FCC and courts around the country continue to expand the reach of the TCPA’s ban on automated calls.  Yet, the TCPA has repeatedly survived strict scrutiny review in courts across the country.On April 24, 2019, the landscape shifted.  The Fourth Circuit, in a highly anticipated decision, struck down a 2015 amendment to the TCPA that exempted federal debt-collection automated calls, finding that the exemption was an unconstitutional content-based restriction on speech in violation of the First Amendment.  See Am. Ass’n of Political Consultants, Inc. v. FCC, Case No. 18-1588 (4th Cir. Apr. 25, 2019).  Although the Fourth Circuit declined to extend its decision to the TCPA as a whole, the decision potentially opens the door to future First Amendment challenges.BackgroundPlaintiffs, who were political and polling organizations, brought this case in the Eastern District of North Carolina against the Federal Communications Commission (FCC) and the U.S. Attorney General in 2016.  Plaintiffs alleged that certain TCPA exemptions created by the FCC, as well as a 2015 congressional exemption, were content-based restrictions.  As such, defendant had the burden of demonstrating that the TCPA’s prohibition on calls using an ATDS was narrowly tailored to further a compelling interest, which it is entitled to protect using the least restrictive means available.  But the TCPA’s prohibition did not satisfy strict scrutiny, Plaintiffs argued.  As such, by favoring commercial speech over the noncommercial political speech of Plaintiffs, the prohibition violated the constitutional rights of these political organizations, Plaintiffs claimed.The district court rejected Plaintiffs’ free speech challenge and granted summary judgment in favor of the Government.  The district court found that it lacked jurisdiction to consider the exemptions created by the FCC, and thus focused its decision on the 2015 congressional exemption, which exempted from the TCPA calls related to the collection of debts owed to or guaranteed by the federal government.  The district court agreed with Plaintiffs that content‑based speech restrictions are “presumptively unconstitutional,” and that the exemption for debt-collection calls did in fact make content-based distinctions.  But the exemption nonetheless satisfied strict scrutiny review because the exemption did not hinder the automated call ban from furthering the compelling governmental interest of protecting the privacy interests of consumers.  Moreover, the district court disagreed with Plaintiffs’ argument that less restrictive alternatives would equally advance the purposes of the automated call ban.  Plaintiffs appealed.The Fourth Circuit Weighs InThe Fourth Circuit vacated and remanded.The Fourth Circuit agreed with the district court that the debt collection exemption facially distinguished between phone calls on the basis of their content, and was thus a content-based speech restriction.  As the district court explained, a private debt collector could make two nearly identical automated calls, with the sole distinction being that the first relates to a loan guaranteed by the federal government, while the second concerns a commercial loan.  The first call would satisfy the debt collection exemption.  The second would be illegal.Because the Fourth Circuit found that the exemption was a content-based restriction on speech, the exemption could only pass constitutional muster if it satisfied a strict scrutiny review, which requires the speech restriction to advance a sufficiently important government objective of the “highest order,” and to be narrowly tailored to fit that objective.  The Fourth Circuit found that the debt collection exemption failed strict scrutiny review because it was “underinclusive”—that is, it covered too little speech—and thus did not serve the compelling governmental interest of protecting privacy in a narrow fashion.Notwithstanding the constitutionally flawed debt collection exemption, the Fourth Circuit held that the exemption did not invalidate the entirety of the automated call ban, and thus agreed with the Government that the exemption could be severed from the TCPA.  As the Fourth Circuit noted, Congress had explicitly mandated that, if a TCPA provision is determined to be constitutionally infirm, severance is the appropriate remedy.  The Fourth Circuit thus vacated the district court’s award of summary judgment to the Government and directed the severance of the debt collection exemption from the automated call ban.TakeawaysAlthough Plaintiffs prevailed in having the district court’s order vacated, the TCPA’s ban on automated calls was not invalidated.  Although the Fourth Circuit declined to extend its invalidation of the debt collection exemption to the TCPA as a whole, the decision is the first to find that the TCPA violates the First Amendment, and potentially opens the door to future First Amendment challenges.  The decision thus begs the question: will courts revisit the TCPA’s ban on the “freedom to distribute information” lauded by the Supreme Court in Martin?  Only time will tell.

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Fourth Circuit’s Decision Revitalizes First Amendment Challenge to the TCPA

Fourth Circuit’s Decision Revitalizes First Amendment Challenge to the TCPA

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In 1943, the United States Supreme Court considered the constitutionality of an ordinance that prohibited door knocking in Martin v. Struthers, 319 U.S. 141 (19

On January 16, Senators John Thune and Ed Markey reintroduced a bipartisan bill designed to update the Telephone Consumer Protection Act (TCPA) and ramp up enforcement against unwanted robocalls and text messages.[1]Purpose of TRACEDThe Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (S. 151) (TRACED) states that it aims to address the skyrocketing volume of automated calls in recent years. The Federal Trade Commission (FCC), which enforces the TCPA, reports that it received 4.5 million complaints about automated calls in 2017, more than double the complaints logged in 2013.[2] One report estimates that 42 percent of cellphone calls in 2019 will come from scammers.[3]Proposed Amendments to the TCPAThe bill aims to curb automated calls by focusing on three principles: authentication, enforcement, and blocking. In particular, it includes provisions that:<ol><li>Require voice service providers to adopt call authentication technologies that enable telephone carriers to verify that incoming calls are legitimate before they reach consumers’ phones;</li><li>Broaden the FCC’s authority to levy civil penalties of up to $10,000 per call on intentional violators of telemarketing restrictions;</li><li>Extend the current one-year window for the FCC to identify and take civil enforcement action against intentional violations to a new three-year window;</li><li>Direct the FCC to work jointly with the Department of Justice, Federal Trade Commission, Department of Commerce, State Department, Department of Homeland Security, Consumer Financial Protection Bureau, and other agencies and non-federal entities to identify methods to deter and criminally prosecute bad-faith actors; and</li><li>Direct the FCC to initiate a rulemaking to help protect subscribers from receiving unwanted calls or texts.[4]</li></ol>State Efforts to Reduce RobocallsStates have also reported they are cracking down on illegal automated calls. A coalition of 40 attorneys general, including California Attorney General Xavier Becarra, have joined to increase enforcement of entities placing unwanted calls. In February, California Senator Ben Hueso submitted a bill that requires telecommunications companies to take necessary steps to stop “neighbor spoofing” calls designed to appear as a local caller.[5] Beyond punishing scammers, this bill directs the California Public Utilities Commission and the California Attorney General’s Office to take action against telecommunications companies that fail to stop these calls.Collateral Impact on Legitimate BusinessesAlthough the proposed legislation is intended to focus on spam calls and texts sent by bad-faith actors, these laws could also impact legitimate businesses trying to reach their customers.[6] Legitimate businesses, such as healthcare providers and other consumer-facing businesses, may need to communicate pertinent and time-sensitive information to consumers who benefit from such communications. But neither the TCPA nor the FCC’s past interpretations of the Act clearly distinguished between illegitimate calls from spammers and communications from good-faith actors. The Senate Committee on Commerce, Science, and Transportation recently commented that the FCC’s previous interpretations of the TCPA “have resulted in uncertainty about how those calling in good faith can comply with FCC regulations, making it more difficult for consumers to receive communications they want and need.”[7]The FCC’s broadened enforcement authority under the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act, coupled with unclear definitions of spammers and auto-dialers, could lead to continuing challenges and increased litigation and enforcement activity in an area already subject to significant litigation.[1] S. 151 – TRACED Act, Congress.Gov (Jan. 16, 2019), <a href="https://www.congress.gov/bill/116th-congress/senate-bill/151/text">https://www.congress.gov/bill/116th-congress/senate-bill/151/text</a>; Thune, Markey Reintroduce Bill to Crack Down on Illegal Robocall Scams, John Thune: U.S. Senator for South Dakota (Jan. 17, 2019), https://www.thune.senate.gov/public/index.cfm/press-releases?ID=AFD16860-99EE-4940-9926-E88826F963B2.[2] Do Not Call Registry Data Book 2017: Complaint Figures by Year, Federal Trade Commission (last visited March 18, 2019), https://www.ftc.gov/policy/reports/policy-reports/commission-staff-reports/national-do-not-call-registry-data-book-fy-2.[3] Thune, Markey Reintroduce Bill to Crack Down on Illegal Robocall Scams, Ed Markey: United States Senator for Massachusetts (Jan. 17, 2019), https://www.markey.senate.gov/news/press-releases/thune-markey-reintroduce-bill-to-crack-down-on-illegal-robocall-scams.[4] Id.[5] Andrew Sheeler, Sick of Robocalls? This California Bill Would Force Phone Companies to Crack Down on Them, The Sacramento Bee (Feb. 7, 2019), https://www.sacbee.com/news/politics-government/capitol-alert/article225637395.html.[6] Id.[7] Senators Advocate for TCPA Clarity in Letter to FCC Chairman Ajit Pai, ACA International (July 26, 2018), https://www.acainternational.org/news/senators-advocate-for-tcpa-clarity-in-letter-to-fcc-chairman-ajit-pai.

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Is a TCPA Overhaul on the Horizon?

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On January 16, Senators John Thune and Ed Markey reintroduced a bipartisan bill designed to update the Telephone Consumer Protection Act (TCPA) and ramp up enfo

Is a TCPA Overhaul on the Horizon?

Does the Hobbs Act require district courts to accept the Federal Communications Commission’s legal interpretation of the Telephone Consumer Protection Act?  That is the question the United States Supreme Court will consider in PDR Network, LLC v. Carlton & Harris Chiropractic Inc., Docket No. 17-1705.  On November 13, 2018, the Supreme Court granted certiorari in the case following the Fourth Circuit’s decision to vacate a lower court decision regarding what constitutes an “advertisement” under the TCPA.BackgroundIn Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, et al., Case No. 3:15-cv-14887, 2016 WL 5799301 (S.D.W.V. Sept. 30, 2016), plaintiff alleged that PDR Network had sent a single fax to plaintiff’s office in violation of the TCPA.  The fax offered the recipient a free “Physician’s Desk Reference eBook.”  PDR filed a motion to dismiss, arguing that the fax was not an advertisement because it did not offer anything for purchase or sale.  The district court agreed.  The court found that an “advertisement” under the TCPA required the fax to have a commercial aim.  The fax at issue, however, exhibited no commercial aim.In so ruling, the court declined to defer to an FCC order interpreting the TCPA’s definition of “unsolicited advertisement,” which had concluded that a message that promoted goods or services at no cost is an unsolicited advertisement.  The court found that the Hobbs Act did not require deference to the FCC’s interpretation of an unambiguous statute.  Because the definition of “advertisement” was clear and easy to apply, the FCC was not due “substantial deference” under Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837, 843 (1984).  Even if it did defer to the FCC’s interpretation, the district court found, the fax was not an advertisement, because the fax did not “promote” anything.The Fourth Circuit Vacates and RemandsPlaintiff appealed the district court’s dismissal of its claim, arguing that the district court erred in declining to defer to the FCC’s 2006 rule.  Specifically, plaintiff argued that the Hobbs Act, 28 U.S.C. § 2342 et seq., required the district court to defer to the FCC’s interpretation of the term “unsolicited advertisement.”  And to the extent that the district court had interpreted the FCC rule, plaintiff argued that the district court erred by reading the rule to require the fax have a commercial aim to be considered an advertisement.  The Fourth Circuit agreed and vacated the district court’s judgment.  Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, 883 F.3d 459 (2018).First, the Fourth Circuit determined that the Hobbs Act deprives district courts of jurisdiction to consider the validity of orders like the FCC’s 2006 Rule.  The Court noted that, in a typical case of statutory interpretation where an agency rule is involved, the Chevron framework requires a court to first ask whether the underlying statute is ambiguous (step one).  Where a statute’s meaning is clear on its face, the inquiry ends and the unambiguous meaning controls.  But the Hobbs Act, the Fourth Circuit found, precluded the district court from even reaching step one.  The Hobbs Act, which provides a mechanism for judicial review of certain administrative rules by federal appellate courts, stripped jurisdiction from the district court regarding the issue.  As such, the district court had acted beyond the scope of its authority by refusing to defer to the FCC rule and instead applying the Chevron analysis.Second, the Court found that the district court’s reading of the 2006 FCC Rule as requiring a fax to have a “commercial aim” to constitute an advertisement was at odds with the plain meaning of the Rule’s text.  Instead, under a natural reading of the text of the FCC Rule, the Rule was clear: faxes that offer free goods and services are advertisements under the TCPA.  As such, the Fourth Circuit vacated the district court’s judgment and remanded the case.Judge Thacker dissented, arguing that, contrary to the majority’s opinion, the district court had not determined the validity of the 2006 FCC Rule simply by engaging in step one of the Chevron analysis.  Invalidation of the FCC Rule only could have occurred at step one if the court found the agency’s construction was in conflict with the unambiguous statutory language.  Here, there was no such finding.  Because the district court concluded that the TCPA was unambiguous, it therefore did not need to defer to the 2006 FCC Rule.  And in reaching its conclusion, it did not “determine the validity” of the rule, but instead assumed the Rule was valid and used the Rule to bolster its interpretation of the TCPA.  As such, the district court had not exceeded the Hobbs Act’s jurisdictional bounds.  Judge Thacker also interpreted the statutory language of the TCPA and found that the TCPA was ambiguous because it suggested two competing interpretations of “advertisement”: one that required a commercial aim and one that did not.  Moving to step two of the Chevron analysis, Judge Thacker concluded that the 2006 FCC Rule required a commercial aim and was entitled substantial deference because it was a “permissible” construction of the TCPA.PDR Petitions for a Writ of CertiorariFollowing the Fourth Circuit’s decision, PDR Network filed a petition for a writ of certiorari asking the Supreme Court to resolve the Circuit split regarding whether the Hobbs Act strips courts of jurisdiction to engage in a Chevron analysis and requires automatic deference to an agency’s order even if there has been no challenge to the validity of such order.  The petition also asked the Supreme Court to consider whether the FCC’s 2006 Order created a per se rule that faxes that “promote goods and services at no costs” qualify as an “advertisement” under the TCPA or whether courts must require a commercial nexus to a firm’s business for a fax to qualify as an “advertisement.”The Supreme Court granted certiorari, but limited certiorari to the first question of whether the Hobbs Act required the district court in this case to accept the FCC’s legal interpretation of the TCPA.  The Supreme Court’s decision will either open or close doors to arguments regarding interpretation of the TCPA.

U.S. Supreme Court to Review Deference to the FCC in TCPA Cases

Does the Hobbs Act require district courts to accept the Federal Communications Commission’s legal interpretation of the Telephone Consumer Protection Act?  Tha

U.S. Supreme Court to Review Deference to the FCC in TCPA Cases