The U.S. Court of Appeals for the Eleventh Circuit recently reversed and remanded judgment in favor of the defendant in a federal Telephone Consumer Protection Act (“TCPA”) case arising from autodialed debt collection calls to a cell phone, holding that:
1. Only cellphone subscribers or their agents may give consent to receive autodialed collection calls to a cell phone;
2. Revocation of consent under the TCPA need not be in writing; and
3. A TCPA violation may be found absent prior express consent for debt collection calls to paging, cellular phone or mobile radio services, even where the subscriber was not charged for the call.
A copy of the opinion is available at: http://www.ca11.uscourts.gov/opinions/ops/201310951.pdf
A consumer (“Consumer A”) applied for a car-insurance policy with a creditor (“Creditor”) and opened a credit card account for the policy premium to be charged to the credit card. Consumer A provided Telephone No. 1 as her cell phone in her application.
Telephone No. 1, along with two other numbers, were actually connected to a single individual account belonging to Consumer A’s housemate (“Consumer B”). Consumer A and B both testified that Telephone No. 1 belonged to Consumer B.
Consumer A modified her contact information in connection with the credit card several times in the years that followed. Consumer A returned a change of address form listing Telephone No. 1 as her work phone. A year later, she updated her contact information to reflect that her home phone number had changed to Telephone No. 1.
Consumer A testified that she subsequently told the Creditor that Telephone No. 1 belonged to Consumer B and was to be used for emergency purposes only. Consumer A also supposedly informed Creditor that Telephone No. 2 was her cell phone number. Creditor maintained that Consumer A provided Telephone 2 as her home phone and no changes were made to the listing of Telephone No. 1 as her work phone.
Consumer A defaulted on her credit card and received 327 autodialed calls to Telephone No. 1. Creditor maintained that at no time did anyone answering Telephone No. 1 indicate the number did not belong to Consumer A. Consumer B testified that he told Creditor twice to stop calling him on Telephone No. 1.
Consumer B sued Creditor alleging violations of the TCPA. Creditor filed a third party complaint against Consumer A, asserting six claims including for indemnification, breach of contract, negligent misrepresentation, and claims to recover the outstanding balance under the credit card. The district court granted summary judgment in favor of Creditor on four of its six claims against Consumer A and dismissed the complaint by Consumer B. Consumer A and B appealed the judgments with respect to the TCPA and negligent misrepresentation claims.
As you may recall, the TCPA prohibits use of automatic telephone dialing systems or an artificial or prerecorded voice for telephone solicitations:
(iii) to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call. . .
47 U.S.C. § 227(b)(1)(A)(iii).
The TCPA allows for recovery for actual monetary loss from such a violation, or $500 in statutory damages for each violation, whichever is greater. 47 U.S.C. § 227(b)(3)(B). Treble damages are also available for knowing or willful violations. Id.
On appeal, the threshold issue was whether Creditor had prior express consent to call Telephone No. 1. Creditor relied on a previous decision from the Eleventh Circuit, holding that a debt collection agency did not violate the TCPA by placing prerecorded calls to collect on debts owed by the previous residents of the home. See Meadows v. Franklin Collection Service, Inc., 414 F.App’x 230 (11th Cir. 2011). Thus, Creditor argued that it had prior express consent from Consumer A as the “intended recipient” of the debt collection calls.
The Court rejected the argument because Meadows concerned a different section of the TCPA prohibiting artificial or prerecorded voice calls to landlines absent prior express consent. Furthermore, the Meadows court relied on a regulation promulgated by the FCC exempting calls to landlines “made to any person with whom the caller has an established business relationship at the time the call was made.” 47 C.F.R. § 64.1200(a)(2)(iv). Because no such exemption exists for calls to cell phones, the Court found Meadows inapplicable to this case.
Instead, the Court looked to a Seventh Circuit case brought by cell-phone subscribers receiving debt collection calls directed at prior subscribers to their phone numbers. See Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637 (7th Cir. 2012). The Seven Circuit held that consent must come from the current subscriber, just as consent may only be revoked by the current subscriber. Id. at 640-41.
Applying this rubric, the Eleventh Circuit indicated that the only way for Creditor to prevail in this action would be to show that it obtained consent from Consumer A, as an agent of Consumer B, and the consent was not revoked. Consumer A and B testified that they have never given each other authority to consent to phone calls from third parties. Creditor argued that the Court should infer such authority because they have an adult son and shared both a home and a cell phone plan. However, because the facts are in dispute, the Court determined that this issue should not have been decided on summary judgment.
The Eleventh Circuit also determined that revocation of consent under the TCPA need not be in writing. In so ruling, the Court rejected Creditor’s argument that revocation must be in writing as required under the FDCPA.
In addition, because a dispute exists as to whether Consumer B effectively revoked whatever consent Creditor may have had to call Telephone No. 1, the Court determined that this issue should not have been decided on summary judgment.
Additionally, the Court also rejected Creditor’s argument that no violation occurred under the TCPA because neither Consumer A nor Consumer B were charged for the calls in question. Under the rule of the last antecedent, the Eleventh Circuit held that the phrase “for which the called party is charged for the call” applies only to the phrase immediately preceding. Thus, according to the Eleventh Circuit, a TCPA violation may be found absent prior express consent for debt collection calls to paging, cellular phone or mobile radio services where the subscriber was not charged for the call. See 47 U.S.C. § 227(b)(1)(A)(iii).
Lastly, the Court turned to the Creditor’s negligent misrepresentation claim against Consumer A for listing Telephone No. 1 as her own, resulting significant legal expenses to defend Consumer B’s action. Consumer A argued on appeal that she could not have made a misrepresentation if she is ultimately found to have had authority to consent to Consumer B receiving calls. In addition, Consumer A argued that Creditor cannot establish justifiable reliance because she had informed Creditor that Telephone No. 1 was only for emergencies, and because Consumer B had told Creditor to stop calling. As the facts are in dispute, the Court again determined that this issue should not have been decided on summary judgment.
Accordingly, the Eleventh Circuit reversed the district court’s grant of summary judgment to Creditor on Consumer B’s TCPA claim, reversed its grant of summary judgment to Creditor on the negligent misrepresentation claim against Consumer A, and remanded for further proceedings consistent with its opinion.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
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