TCPA Do-not-call Provisions Require Express Consent, No Vicarious Liability for Violations: S.D. Florida

Practical Law Legal Update 4-531-6257 (Approx. 5 pages)

TCPA Do-not-call Provisions Require Express Consent, No Vicarious Liability for Violations: S.D. Florida

by PLC Commercial

Background

Mark Mais was admitted to the emergency room of Westside Regional Hospital (Westside) in Broward County, Florida. Under the hospital's admission procedures, Mais' wife provided his cell phone number and received and acknowledged receipt of Westside's "Notice of Privacy Practices." The notice included Westside's policy of releasing patients' telephone number to coordinate health coverage, verify insurance coverage and secure payment for the health care received. After being admitted, Mais received treatment from Florida United Radiology, Inc. (United), a hospital-based health care provider that performed clinical services on behalf of Westside. United billed Mais $49.03 for the treatment.

Mais failed to pay the bill and United engaged Gulf Coast Collection Bureau, Inc. (Gulf) to collect the debt. Gulf attempted to collect the debt by calling Mais approximately 15 times and leaving four messages using an automated dialer.

In response to these debt-collection attempts, Mais, the named plaintiff representative in this case, brought a class action lawsuit against Gulf, United and Sheridan Acquisition, P.A. (United's parent company) (Sheridan, and together with Gulf and United, the defendants), alleging vicarious TCPA violations.

On motion for summary judgment, the defendants argued that the TCPA prohibitions against parties using automatic telephone dialing systems and artificial prerecorded messages allow for an implied consent exception. United and Sheridan also argued that they should not be vicariously liable for Gulf's consumer calls.

Outcome

Express Consent Required

The Court ruled that prohibitions against using automatic telephone dialing systems and artificial prerecorded messages:

Are not subject to an implied consent exception.
Do not impose vicarious liability on companies for the actions of third-parties hired to call consumers.

In making its determination, the Court:

Looked to the plain language of the TCPA section at issue, which specifies that parties must acquire consumers' express consent before initiating non-emergency telephone calls using automatic telephone systems or artificial prerecorded messages.
Rejects the FCC's interpretation of the statute adopted by a 2008 declaratory ruling that interpreted these TCPA provisions to allow for an implied consent exception to collect debts owed when a consumer voluntarily provides his telephone number as part of a credit application. The Court ruled that the FCC's declaratory ruling is inconsistent with the TCPA's plain language.

The Court's deviation from the declaratory ruling is important because the FCC ruling is followed by:

The FCC during TCPA enforcement actions it is authorized to prosecute.
Several jurisdictions in their interpretation of the TCPA, including the Ninth Circuit.

The opinion discussed at length, and ultimately rejected the possibilities that:

The Court was precluded from interpreting the statute under the jurisdictional provisions of the Hobbs-Act.
The declaratory ruling decision deserved deference otherwise.

The Court also found it important to note that:

The TCPA does not apply in a health care context. The Court reasoned that when consumers receive health care, unlike when engaging in debt transactions, consumers do not expect to receive automated or prerecorded debt collection calls.
The 2008 FCC ruling found that express consent must be given directly to the relevant creditor. The Court held the FCC ruling inapplicable here because United, the relevant creditor, obtained Mais' cellular phone number indirectly, from Westside.

No Vicarious Liability

The Court also found that principal companies cannot be held vicariously liable for the actions of third-party companies under the TCPA prohibitions against initiating phone calls using automatic telephone dialing systems and artificial or prerecorded messages. The Court compared the prohibitory language at issue to that of the TCPA section on calling consumers listed on the national do-not-call-registry and noted that:

The TCPA's national do-not-call registry sections specifically impose vicarious liability on companies that employ agents to make calls on their behalf.
The prohibitions against automatic phone calls and prerecorded messages have no vicarious liability language.

Using principles of statutory interpretation, the Court found the absence of vicarious liability language, when it is present elsewhere in the TCPA, signified congressional intent to exclude vicarious liability in this case. On this point the Court again rejected the 2008 FCC declaratory ruling (recently affirmed by the FCC in a 2013 declaratory ruling), which interprets the TCPA prohibitions at issue to impose vicarious liability.

Practical Implications

Whether and how this decision impacts a company in the business of using automatic dialing or prerecorded messages to call consumers (for example, debt collection and telemarketing companies) depends on:

Whether the company places the consumer calls directly or through a third party. For example, for a company:
- directly calling consumers, this opinion will have negative implications because that company must obtain a consumer's express consent before calling that consumer; and
- indirectly calling consumers through a third-party intermediary, this opinion will have positive implications because that company will not be held vicariously liable for third-party calls.
The company's jurisdiction. This opinion impacts companies within the jurisdiction of the Southern District of Florida, however, it may also impact companies in the jurisdiction of other courts that find this opinion persuasive. This case's holdings diverge from other interpretations by the FCC and other courts. To avoid TCPA liability, companies that directly or indirectly call consumers should ensure that they comply with TCPA interpretation by both:
- courts of the relevant jurisdiction; and
- the FCC, which has authority to bring TCPA enforcement actions.

For more information on the TCPA, see Practice Note, Direct Marketing: Regulation of Unsolicited Commercial Communications.

For more on the 2013 FCC declaratory ruling imposing vicarious liability for TCPA violations, see Legal Update, FCC Rules Companies May Be Vicariously Liable for Telemarketer TCPA Violations.

TCPA Do-not-call Provisions Require Express Consent, No Vicarious Liability for Violations: S.D. Florida | Practical Law