The U.S. Court of Appeals for the Ninth Circuit recently affirmed a trial court's grant of summary judgment in favor of the defendant bank in an action brought under the federal Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227.
In so ruling, the Ninth Circuit held that messages sent by the plaintiff consumer's phone to the bank's "short code" number provided the required prior express consent for the bank's responsive messages.
The Court also affirmed the trial court's award of "costs" under Federal Rule of Civil Procedure 41(d), but reversed the trial court's award of attorney's fees as "costs" under Rule 41(d) as a matter of right.
A copy of the opinion is available at: Link to Opinion
The consumer filed a putative class action suit against the defendant bank, in which he claimed that the bank sent text messages to his mobile phone without the prior express consent required by the TCPA.
The consumer was not a customer of the bank during the relevant period. During that time, however, the consumer's mobile phone sent 11 text messages to the bank's short code number. A short code is a short telephone number a business can use to send and receive text messages.
Ten of the text messages were unrelated to the bank or its services, and the bank replied with the first responsive text option. The remaining text message from the consumer to the bank consisted of the word "STOP," to which the bank replied with the second responsive text option. These reply texts were the only text messages the bank sent to the consumer's mobile phone.
The trial court granted summary judgment in favor of the bank, concluding that each text message from the consumer's mobile phone constituted prior express consent for each of the bank's reply texts.
The trial court also granted the bank's motion for an award of "costs" under Fed. R. Civ. Pro. Rule 41(d) which the bank incurred in defending identical litigation commenced by the consumer in a separate federal district court, in which the consumer entered a voluntary dismissal and the other court dismissed the case "without costs to any party."
Finally, the trial court decided "costs" under Rule 41(d) included the attorney's fees incurred by the bank in defending the other litigation and therefore included such attorney's fees in the award of "costs."
The consumer timely appealed both the trial court's grant of summary judgment in favor of the bank on his TCPA claim and its inclusion of attorney's fees as part of its Rule 41(d) award of "costs" to the bank.
As you may recall, the TCPA prohibits making calls to any cellular number by using a system that dials telephone calls automatically or by using an "artificial or prerecorded voice'" unless the caller received "prior express consent" from the recipient. 47 U.S.C. § 227(b).
The TCPA does not define prior express consent. However, in Van Patten v. Vertical Fitness Grp., LLC, the Ninth Circuit adopted the FCC's interpretation of the statute: that a person who knowingly releases his number consents to be called at that number for informational purposes, and that consent is "effective" where the responsive messages relate to the same subject or type of transaction as the messages that led to the response. 847 F.3d 1037, 1044-45 (9th Cir. 2017); In re Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991, 7 F.C.C. Rcd. 8752, 8769 (Oct. 16, 1992).
The consumer argued that the Ninth Circuit has discretion to refuse to employ the FCC's order interpreting "prior express consent." However, the Ninth Circuit noted that Van Patten is a published opinion and binding precedent. See Miller v. Gammie, 335 F.3d 889, 900 (9th Cir. 2003) (en banc) (holding a published opinion may be overruled by a three-judge panel only when it is clearly irreconcilable with an intervening higher authority).
Further, the Ninth Circuit found that Van Patten's reasoning -- i.e., that providing a telephone number to a business as part of telephone communication to that business constitutes express consent to a responsive contact from that business within the scope of that communication - was applicable to the facts here. The consumer initiated contact with the bank, and the bank automatically replied to each contact with a single responsive text message to confirm receipt, provide information that the short code belonged to the bank, and explain how to stop or continue communication.
The Ninth Circuit held that, by sending text messages to the bank's short code, the consumer expressly consented to receiving reply text messages. Each informative and confirmatory reply text message from the bank fell within the scope of the consumer's text message initiating contact, and, therefore, "the scope of [the consumer's] consent to contact." Id. at 1046.
Therefore, the Ninth Circuit held that the trial court did not err in applying Van Patten and granting summary judgment in favor of the bank.
The Ninth Circuit then addressed the consumer's argument that the trial court abused its discretion by including attorney's fees in its award of "costs" to the bank under Fed. R. Civ. Pro. Rule 41(d).
Rule 41(d) allows a court to award "costs" incurred in litigation to a party if the plaintiff dismissed that litigation and then filed another suit based on the same claims, against the same defendant. The Ninth Circuit had not previously decided whether attorney's fees are available under Rule 41(d) as part of "costs."
Here, the Ninth Circuit held that Rule 41(d) "costs" do not include attorney's fees as a matter of right, and thus reversed the trial court's award of attorney's fees in favor of the bank under Rule 41(d). In so holding, the Court announced that it is joining every other Circuit that has meaningfully considered this issue through published opinions. See Horowitz v. 148 S. Emerson Assocs. LLC, 888 F.3d 13, 25 (2d Cir. 2018); see also Garza v. Citigroup Inc., 881 F.3d 277, 283-284 (3rd Cir. 2018); see also Andrews v. Am.'s Living Ctrs., LLC, 827 F.3d 306, 311 (4th Cir. 2016); see also Portillo v. Cunningham, 872 F.3d 728, 739 (5th Cir. 2017); see also Rogers v. Wal- Mart Stores, Inc., 230 F. 3d 868, 874 (6th Cir. 2000), cert. denied, 532 U.S. 953 (2001).
Agreeing with the rulings of the other Circuits, the Ninth Circuit concluded that "costs" is a term which has a long-standing definition that does not inherently include attorney's fees, and nothing in the text of Rule 41(d) compels a contrary reading of this well-understood term.
However, the Ninth Circuit did not decide whether attorney's fees are available under Rule 41(d) if the underlying statute so provides. This is because the Court determined that it is undisputed that the TCPA does not provide for the award of attorney's fees to the prevailing party.
Accordingly, the Ninth Circuit held that the trial court correctly granted summary judgment in favor of the bank, but abused its discretion in including attorney's fees in its award of "costs" under Rule 41(d).
Ralph T. Wutscher
Maurice Wutscher LLP
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