Thursday, July 30, 2015

FYI: 8th Cir Reverses Dismissal of TCPA Putative Class Action, Holding "Purpose" of Call -- Not Its "Content" -- Determines Whether Violation Occurred

The U.S. Court of Appeals for the Eighth Circuit recently held that the "purpose" of the call -- as opposed to the "content" of the call -- determined whether certain prerecorded messages violated the federal Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA), and Missouri Do Not Call Law, Mo. Rev. Stat. § 407.1098.

 

A copy of the opinion is available here: http://media.ca8.uscourts.gov/opndir/15/06/142484P.pdf

 

The plaintiffs, residents of Missouri, were both on a federal and state "do not call list."  Nevertheless, they received two unsolicited pre-recorded messages on their home phone line from one of the defendants, as part of a campaign to promote a movie. 

 

Both messages simply stated: "Liberty.  This is a public survey call.  We may call back later."   The calls, if answered, would have also played a 45 second scripted message that included advertising language.  However, because the plaintiffs did not answer the calls, they only heard the short message regarding a public survey.

 

The plaintiffs sued in state court on behalf of a putative class of people that the defendants had called using the pre-recorded message for alleged violations of the TCPA and the Missouri Do Not Call Law.  While in state court in Missouri, they moved to certify a class of persons that allegedly included "persons in the United States to whom [defendants] within four years of October 3, 2012, initiated one or more telephone calls to such persons' residential telephone lines…" using the pre-recorded message. 

 

Later, the defendants removed to federal court and filed motions to dismiss.  While those motions were pending, the district court, sua sponte, questioned whether the putative plaintiffs had standing and instructed the parties to brief that issue.

 

After the issues were fully briefed, the lower court dismissed the case because none of the messages the named plaintiffs had received "contained an advertisement, telemarketing message, or telephone

solicitation," in violation of the Telephone Consumer Protection Act (TCPA) or the Missouri Do Not Call Law.  The lower court also held that the named plaintiffs were inadequate representatives because their claims were not typical of putative class members under Federal Rule of Procedure 23(a). 

 

The Eighth Circuit reversed, because it focused only on the content of the two messages left on the plaintiffs' voicemail, and not the purpose of the calls. 

 

As you may recall, absent a few exceptions, the TCPA prohibits making "any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior consent of the called party."  47 U.S.C. § 227(b)(1)(B).  The TCPA provides a private right of action, and allows the recovery of actual monetary loss or "$500 in damages for each violation, whichever is greater."  See 47 U.S.C. § 227(b)(3)(B). 

 

One of those exceptions can be found in FCC regulations.  The FCC, through its statutory rulemaking power, exempts artificial or pre-recorded calls that are "made for a commercial purpose but [do] not include or introduce an advertisement, or constitute telemarketing."  See 47 C.F.R. § 64.1200(a)(3)(iii).

 

"Advertisements" include "material advertising the commercial availability or quality of any property, goods, or services." See 47 C.F.R. § 64.1200(f)(1).  The defendants argued that, even if the calls were made for a commercial purpose, the particular messages received by the named plaintiffs (i.e., "Liberty.  This is a public survey call.  We may call back later.") did not violate the TCPA because the messages did not contain an "advertisement" or qualified as "telemarketing" under the FCC's implementing regulations.  The Eighth Circuit agreed that the messages did not mention property, goods, or services, and therefore that the messages were not advertisements prohibited by the TCPA or its implementing regulations.

 

However, the Eighth Circuit held that, while the content of the calls controlled whether they were "advertisements," their purpose controlled whether they were "telemarketing."

 

The Eighth Circuit noted that the FCC's implementing regulations define "telemarketing" as the "initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person." 47 C.F.R. § 64.1200(f)(12).  A "person or entity 'initiates' a telephone call when it takes the steps necessary to physically place [the] call." In the Matter of the Joint Petition filed by Dish Network, LLC, 28 F.C.C. Rcd 6574, 6583 ¶ 26, 2013 WL 1934349, at *8 (F.C.C. May 9, 2013).

 

The Eighth Circuit refused to consider only the content of the calls, citing Congressional findings indicating that consumers consider "prerecorded calls, regardless of the content [of the] message, to be a nuisance and an invasion of privacy." See TCPA of 1991, Pub. L. No. 102–243, 105 Stat. 2394, § 2(10).

 

The Court also noted that "'telemarketing' occurs when the context of a call indicates that it was initiated and transmitted to a person for the purpose of promoting property, goods, or services."  See 47 C.F.R. § 64.1200(a)(2)(iii); 47 C.F.R. § 64.1200(f)(12); see also In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 F.C.C. Rcd at 14098 ¶ 141, 2003 WL 21517853, at *49.

 

The Court held that, because the calls were initiated and transmitted in order to promote a movie, they qualified as "telemarketing" even though the messages the named plaintiffs received never referenced the film.

 

Accordingly, the Eighth Circuit held that, even though the putative plaintiffs had only heard the survey "content," and had not heard any "advertisements," the purpose of the calls was to promote a movie.  Thus, the calls constituted "telemarketing" and the FCC exemption did not apply." 

 

Consequently, the Eighth Circuit held that the lower court erred in concluding that the TCPA and Missouri Do Not Call Law did not apply, and that therefore that the lower court also erred in concluding that the named plaintiffs lacked standing to represent the class and that their claims were not typical of the putative class members. 

 

The Eighth Circuit held that what "matters for all class members, including the [putative plaintiffs] is that each call [from the defendants] was initiated for the purpose of [promoting a movie."  It reversed and remanded the case for further proceedings.  

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.


Our updates are available on the internet, in searchable format, at:

 

Financial Services Law Updates

 

and

 

The Consumer Financial Services Blog

 

and

 

California Finance Law Developments

 

and

 

Insurance Recovery Services

 

 

 

 

 

Sunday, July 26, 2015

FYI: Fla App Ct (2nd DCA) Upholds Successor Servicer's Use of Prior Servicer's Records to Prove Amount Due

The District Court of Appeals of the State of Florida, Second District, recently affirmed a trial court’s order granting a new trial on the issue of damages in a mortgage foreclosure action, holding that a payment history authenticated by the successor loan servicer was admissible under the business records exception to the hearsay rule because the successor servicer independently verified the accuracy of the payment history received from the prior servicer and explained the procedures used to verify the prior servicer’s loan records.  

 

A copy of the opinion is available at:  Link to Opinion

 

This was the second appeal in the same foreclosure action. In the first appeal, the Second District Court of Appeals affirmed the final judgment of foreclosure in the mortgagee’s favor, but reversed and remanded the case for further proceedings to determine the amount owed, because the trial court erred in admitting the testimony of the mortgagee’s records custodian regarding the contents of the records without admitting into evidence any of the business records relied upon.

 

On remand, the trial court held an evidentiary hearing on the issue of damages, at which the mortgagee’s records custodian, a “foreclosure litigation corporate officer” employed by the loan servicer, testified that he was familiar with the servicer’s record-keeping practices and with the mortgagee’s record-keeping requirements for its loan servicers, that the prior servicer was bound by the same requirements, and that the servicer’s “loan boarding” department reviewed the prior servicer’s records for errors and found none.

 

The witness also testified that, when the loan was transferred to the new servicer, the payment history was updated by persons with knowledge of the servicer’s receipt of payments and amounts disbursed, and that it was part of the servicer’s regular course of business to maintain such records.

 

The borrower objected to the admission of the custodian’s testimony as to the amount owed, arguing that the mortgagee failed to lay the proper foundation to admit the payment history under the business records exception to the hearsay rule, codified in section 90.803(6) of the Florida Evidence Code, because he had no personal knowledge of the prior servicer’s record-keeping practices.

 

The trial court agreed and dismissed the case, ruling that the mortgagee could not prove the  amount owed on the loan.

 

The mortgagee moved for a new hearing on the issue of damages, arguing that the trial court should have admitted the payment history pursuant to the Second District Court of Appeals’ prior ruling in WAMCO XXVIII, Ltd. v. Integrated Electronic Environments, Inc., 903 So. 2d 230 (Fla. 2d DCA 2005). The trial court agreed and granted a new evidentiary hearing only on the issue of damages.

 

In WAMCO, the Second District Court of Appeals held that a prior servicer’s loan payment history is admissible under section 90.803(6) when the successor servicer relies on it, independently verifies its accuracy, and the successor servicer’s verification procedures show the records are trustworthy.

 

On appeal in this case, the Second District Court of Appeals held that the trial court correctly applied WAMCO and did not abuse its discretion in granting a new evidentiary hearing as to damages, because the successor servicer’s records custodian laid the proper predicate to admit the payment history in evidence.

 

The Court stressed that “[t]here is no requirement that the records custodian have personal knowledge of the manner in which the prior servicer maintained and created its business records.”

 

The Second District Court of Appeals distinguished rulings relied upon by the borrower from the First and Fourth District Courts of Appeals on the facts, reasoning that in those cases, the records custodian did not testify that the successor servicer independently verified the accuracy of the payment history received from the prior servicer, nor did the successor servicer in the other cases explain the procedures used to verify the prior servicer’s loan records.  

 

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.


Our updates are available on the internet, in searchable format, at:

 

Financial Services Law Updates

 

and

 

The Consumer Financial Services Blog

 

and

 

California Finance Law Developments

 

and

 

Insurance Recovery Services