Wednesday, April 23, 2014

FYI: 9th Cir Rules Consent to Cell Phone Calls After Time of Original Transaction Not Sufficient Under TCPA, Upholds Class Certification

Saturday, October 20, 2012

The U.S Court of Appeals for the Ninth Circuit recently upheld class certification in a lawsuit claiming that a debt collector violated the federal Telephone Consumer Protection Act, and in so doing held that debtors who provide their cellular telephone numbers after the time of the original transaction giving rise to the debt "are not deemed to have consented to be contacted...for purposes of the TCPA." 
A debtor filed a lawsuit against a debt collector, alleging violations of the Telephone Consumer Protection Act ("TCPA") in connection with the debt collector's practice of placing calls to cellular telephone numbers that the debt collector obtained via skip-tracing.  The debtor motioned for a preliminary injunction and provisional class certification, which the lower court granted.
The lower court limited the provisional class to all persons using a cellular telephone number that (1) the debt collector did not obtain either from a creditor or from the injunctive class member; (2) has a California area code; or (3) where the debt collector's records identify the injunctive class member as residing in California.  The debt collector appealed. 
On appeal, the debt collector argued that the requirements of Federal Rule of Civil Procedure 23(a) ("Rule 23(a)") were not met.  As you may recall, Rule 23(a) imposes commonality, typicality and adequacy requirements in connection with class certifications. 
First, the debt collector contended that some debtors included in the class might have agreed to be contacted at any telephone number, including numbers provided after the time of the original transaction.  The Ninth Circuit rejected this argument, noting that a recent Federal Communications Commission ("FCC") ruling provided that "prior express consent is deemed granted only if the wireless telephone number was provided by the consumer to the creditor, and only if it was provided at the time of the transaction that resulted in the debt at issue."  Accordingly, the Ninth Circuit held that "consumers who provided their cellular telephone numbers to creditors after the time of the original transaction are not deemed to have consented to be contacted at those numbers for purposes of the TCPA." 
The Ninth Circuit also rejected the debt collector's contention that the class could include debtors who expressly consented to be contacted via cellular telephone, but whose numbers were nevertheless obtained via skip-trace.  The Ninth Circuit found that argument unpersuasive because the debt collector did not point to a "single instance" where a consent to contact via cellular telephone number was given by a debtor to an original creditor, and the cell phone number was found via skip tracing. 
Next, the Ninth Circuit considered the debt collector's contention that the plaintiff debtor was an inadequate class representative, due to his past convictions for crimes involving dishonesty.  The Ninth Circuit surveyed the trial court's holding, and found that it considered the debtor's convictions, but also took into account that the debtor had "since taken positive steps in his life..."  Accordingly, the Ninth Circuit held that the lower court did not abuse its discretion by accepting the debtor as a class representative. 
The debt collector also challenged the lower court's decision to grant a preliminary injunction.  More specifically, the debt collector argued (1) that the district court erred by finding that the debtor demonstrated a likelihood of success on the merits; and (2) that the lower court erred by holding that the debtor did not need demonstrate irreparable harm to obtain a preliminary injunction. 
The Ninth Circuit considered both arguments, and found in favor of the debtor as to both.  It began by examining the elements of a TCPA claim: "(1) the defendant called a cellular telephone number; (2) using an automatic telephone dialing system; (3) without the recipient's prior express consent."  The Court noted that securities filings by the debt collector indicated that the debt collector used predictive dialing systems, and further noted that the debt collector did not dispute that its predictive dialing systems "have the capacity described in the TCPA."  Therefore, it held that the debt collector used an automatic telephone dialing system, as that term is used in the TCPA, and accordingly rejected the debt collector's "likelihood of success" argument.
The debt collector also took issue with the lower court's decision to hold that the debtor did not need to show irreparable harm in order to obtain a preliminary injunction.  The Court began by noting that the question of whether irreparable harm is necessary in all cases where a preliminary injunction is sought had not yet been resolved in the Ninth Circuit.  The Court found that question to be irrelevant to the outcome here, however, because the debtor in this instance did demonstrate irreparable harm. 
In reaching that conclusion, that Court relied on the lower court's finding that the debt collector would continue to violate the TCPA absent an injunction, and further noted that the debtor collector "did not acknowledge the wrongful nature of its conduct" in its response to the debtor's motion seeking an injunction. 
Accordingly, the Ninth Circuit affirmed the judgment of the lower court.   

Eric Tsai
McGinnis Wutscher Beiramee LLP
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