The U.S. Court of Appeals for the Ninth Circuit recently held that under Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 194 L. Ed. 2d 635 (2016), a consumer alleged a concrete injury sufficient to confer Article III standing to pursue a Telephone Consumer Protection Act (TCPA) for alleged nonconsensual text messages.
In so ruling, the Court held that a consumer may revoke his or her consent, but must clearly express that he or she does not want to receive the messages or calls. The Court concluded that, in this case, the consumer gave prior express consent to receive the text messages at issue and did not effectively revoke his consent, thereby dooming his TCPA claims.
The Ninth Circuit also held that the consumer did not establish economic standing for his claims asserting violations of California Business and Professional Code §§ 17538.41 and 17200.
A copy of the opinion is available at: Link to Opinion
The plaintiff filed suit under the TCPA, alleging a gym sent him unsolicited text messages. The parties disputed the scope of the consumer's consent to being contacted after he gave his cell phone number while signing up for a gym membership, and whether he revoked his consent when he canceled the membership.
As you may recall, the TCPA generally prohibits making nonemergency, unsolicited calls advertising "property, goods, or services" using automatic dialing systems and prerecorded messages. 47 U.S.C. § 227(a)(5); 47 U.S.C. § 227 (b)(1)(A)(iii).
The Federal Communications Commission (FCC), the agency implementing the TCPA, has interpreted the TCPA to "encompass both voice calls and text calls to wireless numbers including, for example, short message service (SMS) calls," which are generally referred to as text messages. In re Rules & Regulations Implementing the TCPA, 18 F.C.C. Rcd. 14014, 14115 (July 3, 2003).
A call or text is not unsolicited, however, where the recipient gave the sender "prior express consent" the calls or texts. 47 U.S.C. § 227(b)(1)(A).
The plaintiff visited a gym franchise to obtain information about a gym membership. During the visit, the consumer submitted a desk courtesy card to the gym, with his wrote his personal and contact information to determine whether he was pre-qualified to become a member.
The plaintiff then signed a gym membership agreement and provided his cell phone number. Within three days of opening his gym membership, the consumer canceled his membership. The consumer subsequently moved to California, but kept his pre-existing cell phone number from his prior residence location.
A management company that operated and managed the gym changed the gym name to a new brand and trademark. After the brand change, the management company's marketing partner announced the gym's brand change via text messages to current and former gym members and invited members to return. The plaintiff received two text messages from the marketer.
The plaintiff then filed a putative class action lawsuit, asserting three causes of action: (1) violation of the TCPA; (2) violation of California Business and Professions Code § 17538.41; and (3) violation of California Business and Professions Code § 17200.
The trial court granted the consumer's motion for class certification, but subsequently granted the companies' motion for summary judgment on all of the claims. The consumer then appealed to the Ninth Circuit.
Before turning to the merits of the consumer's TCPA claim, the Ninth Circuit first addressed whether the consumer had standing under Article III of the Constitution.
As you may recall, under the recent Supreme Court of the United States ruling in Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 194 L. Ed. 2d 635 (2016), to satisfy Article III standing, a plaintiff "must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Id. (applying the traditional standing test from Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992)).
A plaintiff establishes injury in fact, if he or she suffered "'an invasion of a legally protected interest' that is 'concrete and particularized' and 'actual or imminent, not conjectural or hypothetical.'" Id. at 1548 (quoting Lujan, 504 U.S. at 560).
In Spokeo, the Supreme Court reiterated that "Article III standing requires a concrete injury even in the context of a statutory violation," and that a plaintiff does not "automatically satisfy the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right." Id. at 1549.
The companies argued that the consumer did not establish a concrete injury-in-fact necessary to pursue his TCPA claim in light of Spokeo.
The Ninth Circuit disagreed. The Court concluded that, unlike in Spokeo, where a violation of a procedural requirement minimizing reporting inaccuracy might not cause actual harm or present any material risk of harm, the telemarketing text messages at issue here, absent consent, presented the precise harm and infringed the same privacy interests Congress sought to protect in enacting the TCPA.
The Court held that unsolicited telemarketing phone calls or text messages, by their nature, invade the privacy and disturb the solitude of their recipients. A plaintiff alleging a violation under the TCPA "need not allege any additional harm beyond the one Congress has identified." Spokeo, supra, at 1549.
The Ninth Circuit therefore held that the TCPA plaintiff alleged a concrete injury in fact sufficient to confer Article III standing.
Prior consent is a complete defense to the consumer's TCPA claims. The plaintiff contended that he never gave "prior express consent" to receive the text messages, and even if he had, he revoked that consent by canceling his gym membership.
The Ninth Circuit disagreed.
For purposes of the TCPA, the Ninth Circuit held that the scope of a consumer's consent depends on the transactional context in which it is given.
In this case, the Ninth Circuit held that as a matter of law the consumer gave prior express consent to receive the companies' text messages, because he gave his cell phone number for the purpose of a gym membership contract with a gym. The Court noted that the scope of his consent included the text messages' invitation to return and reactivate his gym membership. The text messages at issue here, the Court added, were part of a campaign to get former and inactive gym members to return, and thus related to the reason the consumer gave his number in the first place, to apply for a gym membership.
The Ninth Circuit held that the fact that the gym changed its name and brand affiliation did not affect that the gym was owned and operated by the same entities.
The plaintiff also argued that even if he gave prior express consent, by submitting his phone number in the gym membership application, he revoked his consent when he canceled the gym membership.
Again the Ninth Circuit disagreed. Relying on sister circuit and lower court decisions, the Court held that although consumers may revoke their prior express consent, the consumer's gym cancelation was not effective in doing so here. See Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242, 1255-56 (11th Cir. 2014); Gager v. Dell Fin. Servs., LLC, 727 F.3d 265, 272-73 (3d Cir. 2013).
The Ninth Circuit noted that courts have given three main reasons for concluding that consumers may revoke their consent under the TCPA.
First, such a holding is consistent with the common law principle that consent is revocable. See Gager, 727 F.3d at 270. Second, allowing consumers to revoke their prior consent is consistent with the purpose of the TCPA, which is intended to protect consumers from unwanted automated telephone calls and messages aligns with the purpose of the TCPA. Id. at 271; Osorio, 746 F.3d at 1255. Third, the FCC has implied that consumers may revoke their consent. See SoundBite Communications, Inc., 27 F.C.C. Rcd. 15391, 15398 ¶ 13.
Here, the Ninth Circuit concluded that revocation of consent must be clearly made and must express a desire not to be called or texted.
The Court noted that, when the plaintiff canceled his gym membership, he did not clearly express his desire not to receive further text messages. Accordingly, the Ninth Circuit held that he did not revoke his consent, and affirmed the trial court's grant of summary judgment for the companies on their affirmative defense that the consumer consented to receive the text messages at issue here.
The Ninth Circuit then addressed the consumer's California statutory claims.
The plaintiff alleged that the companies violated California Business and Professions Code § 17538.41, which provides that entities which conduct business California may not transmit, or cause to be transmitted, a text message advertisement to mobile telephones. Cal. Bus. & Prof. Code § 17538.41.
The plaintiff also alleged that the companies violated California Business and Professions Code § 17200, which provides remedies for "any unlawful, unfair or fraudulent business act or practice."
The Ninth Circuit rejected these allegations, holding that under California law, the consumer did not have standing to bring either of these statutory claims.
Both relevant sections of the consumer's California claims may only be prosecuted by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition. See Cal. Bus. & Prof. Code § 17535; Cal. Bus. & Prof. Code § 17204. This economic injury requirement is "more restrictive than federal injury in fact" because it encompasses fewer kinds of injuries. See Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 246 P.3d 877, 885, 886 (Cal. 2011).
Here, the Ninth Circuit held, the plaintiff could not prove that the text messages caused him to suffer an economic injury that was concrete and particularized and actual or imminent. See Kwikset, supra, 246 P.3d at 886.
Although the plaintiff argued that he was charged for the text messages sent by the companies, the Court noted that he had an unlimited text messaging plan in which regardless of how many text messages the consumer received, he still paid the same monthly fee.
The plaintiff nevertheless contended that he was still charged for the texts because every text message he received ultimately affected his cellular telephone provider's bundled pricing, but the Court disagreed, because that this argument was hypothetical and conjectural.
The Ninth Circuit therefore held that because the consumer failed to demonstrate that any price increase was caused by the companies' conduct, he did not show and could not demonstrate any economic injury. Accordingly, the Ninth Circuit held that the consumer lacked standing to bring his claim under California Business and Professions Code §17538.41 and § 17200.
In sum, the Ninth Circuit affirmed the trial court's grant of summary judgment in favor of the companies on all claims.
Ralph T. Wutscher
Maurice Wutscher LLP
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