Monday, August 29, 2016

FYI: ND Cal Holds Alleged "Invasion of Privacy" Sufficient for TCPA Standing

The U.S. District Court for the Northern District of California recently held that a mobile phone app designed to send messages to a phone user's contacts did not violate the federal Telephone Consumer Protection Act ("TCPA"), because the phone user selected the message recipients and had to take several affirmative steps for the app to send the unwanted messages.

In so ruling, the Court also held that the plaintiff had Article III standing because his TCPA claim did not simply allege a procedural violation, and instead alleged that he suffered concrete harm because the mobile app provider supposedly invaded his privacy

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

A phone user received an allegedly unwanted text message with a hyperlink.  The defendant company sent the message to advertise its mobile app.  The phone user alleged he had never been a user of the app nor downloaded the app onto any device.

The app allows users to communicate with and see the location of the contacts in their phone.  The app requires users to download it on their phone.  After downloading the app and creating an account, users are asked, "Want to see others on your map?"  Users who click the "Yes" button are asked permission for the company to access their contacts.  Users who allow permission are then brought to a screen to "Add Member[s]," with certain "Recommended" members selected through an algorithm. 

Each "Recommended" contact appears with a checkmark next to it.  An "Invite" button showing the number of selected invitations is at the bottom of this screen.  The app does not inform users how or when invitations will be sent.  The app states that it has full control over the content of the text message and when it will send the message, if the app sends it at all.

The phone user brought a class action complaint alleging violations of the TCPA and the California unfair competition law.  The mobile application company moved to dismiss both claims. 

As a preliminary matter, the District Court determined that the phone user sufficiently alleged that he suffered a concrete injury and consequently had standing to bring the case. 

As you may recall, Article III standing requires that a plaintiff "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." Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). The "injury in fact must be both concrete and particularized." Id. at 1548. The Supreme Court recently made clear that, "Article III standing requires a concrete injury even in the context of a statutory violation," and a plaintiff does not "automatically satisf[y] 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. That is, a plaintiff cannot "allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III." Id.

The Court reasoned that the phone user supposedly suffered a necessary concrete injury because he alleged an invasion of privacy.

The Court also rejected the defendant's efforts to distinguish two other court rulings allowing TCPA standing on grounds that the alleged conduct in the other cases was more pervasive than here.  The Court explained that "such distinctions go only to the extent of the injury, not whether there was a concrete injury at all."

The Court then turned to the merits of the TCPA claim.  The Court noted the established rule that a text message is a "call" under the TCPA.  The relevant TCPA section makes it unlawful to "to make any call… using any automatic telephone dialing system or an artificial or prerecorded voice… to any telephone number assigned to a … cellular telephone service."  47 U.S.C. § 227(b)(1)(A)(iii).  

The Court noted that the determination of liability depended on whether the mobile app company "made" the unwanted call or used an "automatic telephone dialing system" as intended by the TCPA.   In making this determination, the Court relied on the Federal Communications Commission's ("FCC") analysis in In the Matter of Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991, 30 F.C.C. Rcd. 7961. 

The FCC explained who "makes" a call by distinguishing the practices of two mobile application companies.  According to the FCC, one company "made" a call under the TCPA by designing a mostly automated app that sent invitational texts of its own choosing to every contact in the app user's contact list with little or no input by the phone user. 

The other company did not "make" a call under the TCPA because it designed a user-action based app that required the phone user to: 1) tap a button that invites contacts to use the app; 2) determine whether to invite all contacts or individually select contacts; and 3) choose to send the invitational text message by tapping another button. 

Put differently, the FCC concluded that the phone user's affirmative steps stripped the user-action based app company from the status of "maker" of the call under the TCPA.  This held true even if the app still controlled the content of the text message.

The District Court here followed the FCC's analysis and determined that the defendant mobile application company did not "make" a call because its app required affirmative steps by phone users, namely granting the app access to their contacts, selecting the invitees, and tapping an additional invite button.   It was immaterial, for the purposes of who "makes" a call under the TCPA, whether an app informs the user how invitations will be sent. 

The Court stated that the goal of the TCPA is to prevent an invasion of privacy and the person who chooses to send an unwanted invitation is responsible for the invasion regardless of the form of the invitation.  The app's "recommended" invitee feature was not material to the result because the phone user must first take the affirmative step to share contacts with the app and then has the option to deselect "recommended" invitees.  For added measure, the Court noted, the phone user must press the "Invite" button after selecting invitees.

As to the California unfair competition law claim, the plaintiff phone user conceded that the California statutory claim required a violation of the TCPA.  Accordingly, the Court summarily dismissed the state claim. 

Accordingly, the District Court dismissed the phone user's entire complaint with prejudice.

Eric Tsai
Maurice Wutscher LLP
71 Stevenson Street, Suite 400
San Francisco, CA 94105
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