Saturday, January 16, 2016

FYI: SD NY Dismisses TCPA Class Action, Holding No Direct or Vicarious Liability Adequately Pled

The U.S. District Court for the Southern District of New York recently dismissed a putative class action alleging violations of the federal Telephone Consumer Protection Act ("TCPA") against a marketing company that conducted a mass text message advertising campaign on behalf of a national retail clothing store.


In so ruling, the Court held that:  (1) the plaintiffs failed to adequately plead that the marketing company is directly liable under the TCPA as the party who "made" the subject text messages; and  (2) the plaintiffs failed to adequately plead any agency relationship between the marketing company and the company that actually sent the subject text messages.

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


The plaintiffs' third amended complaint ("TAC") sought statutory damages and injunctive relief, alleging that the defendants – including the marketing company, and the retail clothing store – supposedly violated the TCPA by sending unsolicited or "spam" text messages using an automatic telephone dialing system ("ATDS") to consumers' cellular phones without their prior express consent.


The marketing company moved to dismiss the TAC for failure to state a claim upon which relief may be granted, arguing that even accepting the TAC's factual allegations as true, the TAC failed to state a plausible claim for either direct or vicarious liability on the marketing company's part.


As you may recall, the TCPA makes it unlawful for anyone:  "(A) to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice — . . . (iii) to any telephone number assigned to a . . . cellular telephone service . . . or any service for which the called party is charged for the call."  See 47 U.S.C. § 227(b)(1)(A)(iii).


In opposition, the plaintiffs argued that the TAC stated a claim because the TCPA's implementing regulation, 47 C.F.R. § 64.1200(a)(2) prohibits any person from initiating, or causing to be initiated, any telephone call or text message that constitutes advertising or telemarketing without the prior express written consent of the called party.


The Court rejected this argument, reasoning that the TAC only contained allegations of violation of section 227(b)(1)(A)(iii) of the TCPA, which imposes liability for "making" a telephone call or text, not its implementing regulation, which does not define "make" and instead uses the words "initiate, or cause to be initiated."  Thus, the Court held, the plaintiffs put the language of the statute at issue in the TAC, not the language of the implementing regulation.


The Court explained that the other courts that have addressed the issue have "held that the verb 'make' imposes civil liability only on the party that places the call or text."


The plaintiffs did not allege in the TAC that the marketing company actually sent or placed the texts, but rather alleged in conclusory fashion that it "caused texts to be sent on behalf of [the retailer]," and the defendants were "responsible for sending the Spam Texts" to many people throughout the United States.


Parsing the language of the TAC, the Court concluded that "[t]he absence of an allegation of who actually 'made' or physical placed the text message is not lost on the Court. Plaintiffs' conclusory assertions that [the marketing company] sent or caused the text message to be sent is simply a legal conclusion devoid of further factual enhancement.  Because Plaintiffs do not plead that [the marketing company] 'made,' i.e., physically placed or actually sent, the text messages, the TAC fails to state a claim that is plausible on its face under section 227(b)(1)(A)(iii) of the TCPA."


Having determined that the TAC failed to state a claim for direct liability against the marketing company, the Court analyzed whether it stated a claim for vicarious liability under the TCPA.


The Court rejected the plaintiffs' argument that the TAC sufficiently alleged that a third party company whose "texting platform" actually sent the messages was the marketing company's agent, and the marketing company controlled the texting campaign.


The Court held that "[e]ven assuming that there is vicarious liability for a violation of section 227(b) of the TCPA, Plaintiffs fail to plead facts that [the third party texting platform provider] was the [marketing company's] agent."  The Court held it was not enough to allege in conclusory fashion that the marketing company controlled the third party with the texting platform. Instead, the Court held that the plaintiffs had to allege "some facts regarding the relationship between an alleged principal and agent (or an allege agent and sub-agent)."


The Court ruled that the plaintiffs' mere conclusory allegations that the third party texting company was the marketing company's agent or that the marketing company had the right to control the sending of the texts, without more, fail to plead an agency relationship -- between the marketing company and the texting company or any other entity -- sufficient to allege vicarious liability under section 227(b)(1)(A)(iii) of the TCPA.


Accordingly, the Court dismissed the plaintiffs' TCPA claims against the marketing company, and the marketing company's motion to strike the class allegations in the TAC was denied as moot.





Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
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Chicago, Illinois 60602
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