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TCPA Questions Loom As 11th Circ. Considers 3 Cases

By Ian Ross and Adam Foslid

 (Originally featured by Law360 at https://www.law360.com/appellate/articles/1151133/tcpa-questions-loom-as-11th-circ-considers-3-cases)

 Federal district courts in Florida in recent years have become well-acquainted with the Telephone Consumer Protection Act, 47 U.S.C. § 227. In 2018, for the fifth consecutive year, more than 3,000 TCPA lawsuits were filed in federal court, and Florida remained a hotbed for TCPA litigation.[1]

A number of federal judges in Florida now use specific standing orders for TCPA class actions, and increasingly in the Southern District of Florida, these cases are fast-tracked and set for trial within eight to ten months of filing. But courts deciding these cases are still seeking clarity from the Federal Communications Commission and appellate courts on how the TCPA and, specifically, its definition of the term “automatic telephone dialing system,” should be interpreted. This much-needed clarity may be on the way.

The FCC is expected sometime soon to issue new interpretative guidance on the definition of an ATDS in light of the D.C. Circuit Court of Appeals’ March 2018 decision in ACA International v. FCC. The court in ACA Int’l vacated in substantial part the FCC’s prior guidance on this issue. By way of background, the FCC had over the years issued a series of rulings enlarging the definition of an ATDS, culminating in an expansive interpretation of the statutory definition in its 2015 Declaratory Ruling and Order.[2]

The FCC’s 2015 ruling was so expansive that the D.C. Circuit observed that a “straightforward reading” of the order “invites the conclusion” that even ordinary smartphones could be, in effect, ATDS equipment.[3] The D.C. Circuit determined that this interpretation was arbitrary and capricious, and vacated the FCC’s guidance.[4] Thereafter, in a pair of public notices in June and October 2018, the FCC announced that it was seeking public comment in anticipation of offering new interpretative guidance on the definition of an ATDS.[5] No further public comments have been requested since then, and the FCC is now expected to issue its new interpretative guidance of what constitutes an ATDS.

Given the present uncertainty surrounding how the statutory definition of ATDS should be interpreted, some district courts in Florida have decided to temporarily stay TCPA cases pending the FCC’s issuance of new interpretative guidance.[6] Other courts are pressing ahead. But those courts have disagreed on whether the D.C. Circuit’s order vacating the guidance in the 2015 Declaratory Ruling and Order necessarily invalidated the ATDS guidance in the FCC’s prior rulings, and also whether, after ACA Int’l, the statutory definition requires that a dialing system must be able to randomly or sequentially generate telephone numbers to qualify as an ATDS.[7]

In a decision last year, for example, a Florida district court held that “the appropriate standard to determine whether [equipment] is an automatic telephone dialing system is whether the program (1) lacks the capacity to randomly or sequentially generate phone numbers, or alternatively, (2) lacks the ability to send messages without human intervention.”[8] A couple of months later, however, another Florida district court offered a different standard in denying a defendant’s motion to dismiss, finding that the “‘statutory definition of ATDS includes a device that stores telephone numbers to be called, whether or not those numbers have been generated by a random or sequential number generator.’”[9]

Although Florida district courts are likely to continue to grapple with this issue as they await guidance from the FCC, they soon may have the benefit of rulings by the U.S. Court of Appeals for the Eleventh Circuit on three significant issues involving the TCPA.

First, the Eleventh Circuit will consider the FCC’s guidance that an ATDS must have the capacity to dial telephone numbers “without human intervention.”[10] In Glasser v. Hilton Grand Vacations Co. LLC, the district court granted summary judgment for the defendant, finding that the dialing system at issue was not an ATDS because it could not dial without human intervention, specifically, a series of manual steps performed by a user before the system dialed any numbers.[11]

The plaintiff argued that because no manual human-directed steps were taken at the point when phone numbers were actually dialed, the dialing process was automatic and did not require human intervention. The district court disagreed, finding that this argument “fail[ed] to appreciate the integral part that human intervention plays in the calling process,” and concluding that because human intervention was required throughout the process leading to the moment when a call was dialed, the system was not an ATDS.[12]

With this matter now on appeal, the Eleventh Circuit appears ready to decide whether the “human intervention” standard refers only to whether a human participates in the actual dialing of the phone number, or whether it applies to the system’s calling process.

Second, in Salcedo v. Hanna et al., the Eleventh Circuit Court of Appeals may soon decide a more threshold question of whether a single text messages causes a concrete injury sufficient for Article III standing.[13] In Salcedo, the district court denied the defendants’ motion to dismiss for lack of Article III standing, relying on the Eleventh Circuit’s previously holding that the receipt of a one-page fax advertisement was a concrete injury under the TCPA sufficient to confer standing in Palm Beach Golf Center-Boca Inc. v. John G. Sarris.[14]

But the district court acknowledged that the Eleventh Circuit reached that holding before the U.S. Supreme Court’s ruling in Spokeo Inc. v. Robbins,[15] and the Eleventh Circuit’s ruling in Nicklaw v. Citimortgage,[16] and thus found that the question of whether the receipt of a single unsolicited text message created Article III standing was an unsettled question of law appropriate for an interlocutory appeal.[17] The Eleventh Circuit held oral argument in Salcedo on Oct. 2, 2018, and a decision is expected this year.

And, third, the Eleventh Circuit in Edelsberg v. Vroom Inc., is considering the circumstances under which an information text message may be considered a “dual purpose” message sufficient to constitute “telemarketing” under the TCPA.[18] The plaintiff in Edelsberg posted a classified advertisement in July 2016 on Craigslist to sell a car that included his mobile phone number; a few days later, he received a text message from Vroom responding to his post and directing him to the Vroom website so that he could complete a vehicle appraisal form.[19]

The district court held that the purpose of the text message, even though it directed the plaintiff to the Vroom website where products or services might be advertised, was informational, and that because the content of the text message did not have an advertising purpose, it was not a “dual purpose” message and did not constitute “telemarketing” under the TCPA.”[20]

On appeal, the Eleventh Circuit will consider whether the posting of a mobile phone number in a classified advertisement constitutes “prior express consent” to receive informational text messages, and whether the specific text message sent to the plaintiff had a “telemarketing” component. The ruling may provide guidance to lower courts where plaintiffs advance a “dual purpose” argument to avoid defenses by companies that they were given their customers’ prior express consent to be contacted.

As district courts await clarity on these issues, hundreds of TCPA cases are filed every month, many of them in Florida.[21] Although the pace of these filings has slowed slightly in the last two years, the proliferation of these claims and the dangers of TCPA liability has not in all instances led to better compliance practices by companies. In fact, a recent survey by CompliancePoint, an information security and risk management consultant, shows that only 30% of telemarketers report full awareness of the rules and guidelines governing the TCPA, and nearly 78% report that their organization does not fully comply with TCPA regulations.[22]

Thus, guidance on how dialing systems and consent issues will be analyzed under the TCPA’s statutory language is of increasing importance to courts, litigants and companies using these systems to communicate with their customers.

 [1] See WebRecon Stats for December 2018, available at https://webrecon.com/webrecon-stats-for-dec-2018-2018-ends-with-a-whimper/.

[2] See In the Matter of Rules and Regulations Implementing the TCPA, 30 F.C.C. Rcd. 7961, 7974 (2015). The FCC has authority to issue regulations to implement the TCPA. See, e.g., 47 U.S.C. § 227(b)(2) (directing the FCC to “prescribe regulations to implement the requirements of this subsection”).

[3] See ACA Int’l v. F.C.C. , 885 F.3d 687, 699 (D.C. Cir. 2018) (“a straightforward reading of the [2015 FCC Order] invites the conclusion that all smartphones are autodialers”); Dominguez v. Yahoo, Inc. , 894 F.3d 116, 119 (3d Cir. 2018) (“as the FCC had conceded in its [2015 FCC Order], any ordinary smartphone could achieve autodialer functionality by simply downloading a random-number-generating app”).

[4] ACA Int’l, 885 F.3d at 700, 703. The D.C. Circuit Court of Appeals found that the 2015 FCC Order’s interpretation of ATDS, “in describing the functions a device must perform to qualify as an autodialer, fails to satisfy the requirement of reasoned decision making.” Id. at 704. The 2015 FCC Order’s reading of ATDS, the decision found, resulted in an “unreasonably expansive interpretation of the statute,” and “would appear to subject ordinary calls from any conventional smartphone to the Act’s coverage,” which would give the statute “an eye-popping sweep.” Id. at 692, 697 (emphasis added).

[5] See Consumer and Governmental Affairs Bureau Seeks Comment on Interpretation of the Telephone Consumer Protection Act in Light of the D.C. Circuit’s ACA International Decision, 83 Fed. Reg. 26284-86 (rel. June 6, 2018); Consumer and Governmental Affairs Bureau Seeks Further Comment on Interpretation of the Telephone Protection Act in Light of the Ninth Circuit’s Decision in Marks v. Crunch San Diego, LLC Decision (rel. Oct. 3, 2018).

 [6] See, e.g., Secure v. Ultimate Fitness Group , No. 18-20483-CIV-MORENO, 2019 U.S. Dist. LEXIS 45194, at *3 (S.D. Fla. Mar. 18. 2019); Goodman v. Sun Tan City, LLC, No. 9:18-cv-81281-ROSENBERG/REINHART (S.D. Fla. order entered Dec. 27, 2018); Zannini v. Xpress Urgent Care, LLC, No. 2:18-cv-14388-ROSENBERG/MAYNARD (S.D. Fla. order entered Nov. 20, 2018).

[7] See, e.g., Pinkus v. Sirius XM Radio, Inc. , 319 F. Supp. 3d 927, 935 (N.D. Ill. 2018) (holding that ACA Int’l “necessarily invalidated” “not only the 2015 Declaratory Ruling’s interpretation of the statutory term ATDS, but also the 2008 Declaratory Ruling’s and 2003 Order’s interpretation of that term”); Gonzalez v. Ocwen Loan Servicing, LLC , No. 5:18-cv-340-Oc-30PRL, 2018 U.S. Dist. LEXIS 153480, at *14–15 (M.D. Fla. Sep. 5, 2018) (agreeing that ACA Int’l vacated the FCC’s 2015, 2008, and 2003 Orders, requiring the court to “return[] to the statutory definition of an ATDS found in § 227(a)(1)”); Keyes v. Ocwen Loan Servicing, LLC , Case No. 17-cv-11492, 2018 WL 3914707, --- F. Supp. 3d ---, at *6 (E.D. Mich. Aug. 16, 2018) (same); Herrick v. GoDaddy.com LLC , 312 F. Supp. 3d 792, 801 (D. Ariz. 2018) (holding that, after ACA Int’l, none of the FCC’s prior pronouncements on what constituted an ATDS were entitled to deference); cf. Reyes v. BCA Fin. Servs., Inc. , 312 F. Supp. 3d 1308, 1321 (S.D. Fla. 2018) (rejecting argument that “prior FCC orders can no longer be relied upon”); Ramos v. Hopele of Fort Lauderdale, LLC , 334 F. Supp. 3d 1262, 1272 (S.D. Fla. 2018) (Seltzer, J.), appeal docketed, No. 18-14456 (11th Cir. Oct. 22, 2018) (finding that ACA Int’l “left intact the FCC’s prior orders”).

[8] Ramos, 334 F. Supp. 3d at 1265-66.

[9] Adams v. Ocwen Loan Servicing, LLC , No. 18-81028-CIV-DIMITROULEAS, 2018 WL 6488062, at *3 (S.D. Fla. Oct. 29, 2018) (emphasis added) (quoting Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1043 (9th Cir. 2018)).

[10] See, e.g., In re Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14,014, 14,090-93 (July 3, 2003); In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 23 FCC Rcd. 559, 566 (Jan. 4, 2008); In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 27 FCC Rcd. 15391, 15392, n. 5 (Nov. 29, 2012).

[11] Glasser v. Hilton Grand Vacations Co., LLC , 341 F. Supp. 3d 1305, 1311-12 (M.D. Fla. 2018), appeal docketed, No. 18-14947 (11th Cir. Nov. 28, 2018). A second case considering human intervention is also pending in the Eleventh Circuit. See Ramos, 334 F. Supp. 3d at 1264.

[12] Glasser, 341 F. Supp. 3d at 1312.

[13] See Salcedo v. Hanna, et al. , Case No. 16-cv-62480-GAYLES, 2017 WL 4226635, at *2 (S.D. Fla. June 14, 2017), appeal docketed, Case No. 17-14077 (11th Cir. Sept. 13, 2017).

[14] Palm Beach Golf Center-Boca Inc. v. John G. Sarris , D.D.S., P.A., 781 F.3d 1245 (11th Cir. 2015)

[15] Spokeo Inc. v. Robbins , 136 S. Ct. 1540, 1549 (2016)

[16] Nicklaw v. Citimortgage , 839 F.3d 998, 1003 (11th Cir. 2016)

[17] See 2017 WL 4226635, at *1 (S.D. Fla. June 14, 2017). At least one Florida district court has stayed a TCPA case while the Eleventh Circuit appeal in Salcedo is pending. See Fridman v. The Collection LLC , Case No. 18-cv-20348-UU, 2018 WL 2254570, at *1 (S.D. Fla. Mar. 27, 2018).

 [18] See Edelsberg v. Vroom, Inc. , Case No. 16-cv-62734-GAYLES, 2018 WL 1509135, at *2 (S.D. Fla. Mar. 27, 2018), appeal docketed, Case No. 18-11317 (11th Cir. Mar. 30, 2018).

[19] 2018 WL 1509135, at *2.

[20] Id.at *6.

[21] See WebRecon Stats for February 2019, available at https://webrecon.com/webrecon-stats-for-feb-2019-keep-on-keeping-on/.

[22] See Nearly 78% of Telemarketers Polled in Telephone Consumer Protection Act Report Their Organization Does Not Fully Comply With TCPA Regulations, Lack in Awareness Puts Businesses at Risk, available at https://telecomreseller.com/2019/04/08/nearly-78-of-telemarketers-polled-in-telephone-consumer-protection-act-survey-report-their-organization-does-not-fully-comply-with-tcpa-regulations-lack-in-awareness-puts-businesses-at-risk/; see also https://www.compliancepoint.com/resource-center and https://info.compliancepoint.com/hubfs/TCPA%20survey%202019.pdf (full survey results).

 

 

Florida Appellate Court Limits Obligations of Third Parties to Preserve Evidence

By Ian Ross

 (Originally featured by Daily Business Review at https://www.law.com/dailybusinessreview/2019/05/30/florida-appellate-court-limits-obligations-of-third-parties-to-preserve-evidence/)

 

Most litigators are familiar with this call from a client: “I just opened a letter from an attorney instructing my company to preserve all documents and follow a bunch of instructions about what to do with our electronic data and email. I’ve never heard of the case the attorney mentions. It doesn’t involve us. Do I have to follow all of these instructions?”

In a recent decision, Florida’s Third District Court of Appeals may have provided an answer. On April 26, the appellate court held that Florida law does not “impose a duty on nonparties to litigation to preserve evidence based solely on the foreseeability of litigation,” see Shamrock-Shamrock v. Remark, Case No. 5D18-1987, 2019 WL 1868175, — So. 3d — (Fla. 3d DCA Apr. 26, 2019). In the underlying action, Shamrock-Shamrock, Inc. (Shamrock), a property owner, had filed a complaint against the city of Daytona Beach relating to a zoning dispute. In the complaint, Shamrock alleged that Tracey Remark, a third party, had participated in hearings and written a letter relevant to the zoning dispute.

During discovery, Shamrock served a series of deposition notices on Remark. When she was finally deposed nearly a year later, Shamrock determined that she had not preserved records regarding the dispute. In the interim—after she received her first deposition notice but before receiving an amended deposition notice with a duces tecum request—she had also purchased a new computer and destroyed her old computer. Shamrock then brought a two-count complaint against Remark alleging that she had intentionally or negligently destroyed her computer, and claiming that she had a duty to preserve evidence based on the foreseeability of litigation.

The trial court granted summary judgment in Remark’s favor. The appellate court affirmed, finding that, absent a “statute, contract, or discovery request that would impose a clearly defined duty” on the third party, there is no generalized duty to preserve potentially relevant evidence based solely on the knowledge of the lawsuit. To hold otherwise, the court found, would be “tantamount to declaring a general legal duty on any nonparty witness to anticipate the needs of others’ lawsuits.” Although the court recognized that “there are innumerable circumstances in which a nonparty to litigation may have evidence relevant to a case and may know of its relevance,” “that knowledge, by itself, should not give rise to a duty to safeguard the evidence in anticipation of litigation.”

The appellate court conceded that, understandably, it could not “speculate as to every circumstance under which a third party to litigation may have a legal duty to preserve evidence.” Indeed, other courts have observed that this duty may arise in a number of ways, including by way of “an agreement, contract, statute, or other special circumstance,” see Wilson v. Beloit, 921 F.2d 765, 767 (8th Cir. 1990) (quoting Koplin v. Rosel Well Perforators, 734 P.2d 1177, 1179 (Kan. 1987)). Preservation obligations may exist for third parties that are agents or affiliates of a party, or that have control or legal right of access to the documents of a party in litigation. Likewise, an insurer or expert that is entrusted with a party’s documents may assume a duty to preserve them, see Thompson v. Owensby, 704 N.E.2d 134, 139 (Ind. Ct. App. 1998).

Thus, although that there may be no generalized duty for third parties to preserve evidence, third-party preservation letters still have their use. In particular, practitioners may find value in sending preservation letters once litigation is reasonably anticipated to third parties who may have control of a party’s documents. Likewise, when a client calls seeking advice about a nonparty preservation letter it has received, counsel should consider the client’s relationship with the parties in litigation, including whether the client has been entrusted with potential evidence by one of the parties or whether a special relationship might exist that imposes a preservation duty.

An analysis of a client’s duty to preserve, as with any legal analysis of a duty owed to a third party, will likely depend on a number of factors and requires an understanding of the law in that jurisdiction. Even in jurisdictions where a generalized duty to preserve documents does not exist for nonparties, courts have recognized that there may be an independent claim for negligence or spoliation of evidence where a third party undertakes to preserve evidence and a party reasonably and detrimentally relies on that undertaking, seeSwick v. The New York Times, 815 A.2d 508, 512 (N.J. App. Ct. 2003). The Remark decision offers useful guidance on the general rule in Florida law, but the specifics of the nonparty’s duty to the parties in litigation may lead to a different result.

 

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