Much Ado About Standing: TCPA Cases Continue to Confuse and Delight—Pushing the Limits of Article III Standing Principles

Its been a standing roller coaster in TCPAWorld recently.

Just a few weeks ago the Seventh Circuit Court of Appeals clarified that a meritorious defense does not deprive a court of jurisdiction to adjudicate the claim (albeit in Defendant’s favor.) Nonetheless the US District Court of the District of New Mexico entered a ruling this week dismissing a Plaintiff’s claim—at the pleadings stage—for lack of standing because the Plaintiff had not sufficiently alleged the challenged calls came from the Defendant. But then the Second Circuit Court of Appeals entered a ruling the next day refusing to consider such merits-based defenses in the standing context, but nonetheless determining that the receipt of any ole unwanted text message confers standing.

Let’s get to it.

In Barker v. Sunrun Inc., No. CV 18-855 KG/LF, 2019 U.S. Dist. LEXIS 71706 (D. N.M. April 29, 2019) the Court dismissed the Complaint reasoning that the Plaintiff had failed to meet the Lujan factor requiring a Plaintiff show an injury that “is fairly traceable to . . . the defendant.” Notably, the Plaintiff alleged conduct that seemingly put the merits of the Defendant’s defense—i.e. that it was not responsible for the challenged calls—at issue.  Specifically the Plaintiff alleged that the calls at issue ultimately came from the Defendant, even if through agents.

In passing on the allegations of the complaint, however, the court rejected Plaintiff’s allegations of an agency relationship finding the allegations merely conclusory—and not entitled to a presumption of truth. The Court also refused to consider Plaintiff’s declarations to the effect that the Defendant was associated with the caller— the court treated the jurisdictional challenge as a facial challenge and refused to consider such extrinsic evidence of jurisdiction. (That is a bit of an odd procedure since a Plaintiff can ordinarily salvage jurisdiction with extrinsic evidence, but then, this entire case is a bit odd.)  Finally the Court refused to accept evidence that a wholly owned subsidiary of the Defendant made the calls—as a California district court similarly held a couple of weeks, corporate parents are not ordinarily liable for the acts of subsidiaries in TCPA cases. Hence, the court concludes: “Plaintiff has not alleged facts sufficient to fairly trace the offending phone calls to any conduct of Sunrun.. and the Court concludes Plaintiff lacks Article III standing to bring any of the claims asserted against Sunrun.”

Weird, no? Well things get even weirder.

The very next day, the Second Circuit Court of Appeals issued its own ruling on Article III standing the TCPA context, with a decision finding that even a single unwanted text message confers Article III standing. To call the procedural posture unusual, however, would be an understatement.

In Melito v. Experian Mktg. Solutions, Inc., Docket Nos. 17-3277-cv (L), 17-3279-cv (Con), 2019 U.S. App. LEXIS 12945 (2nd Cir. April 30, 2019) the Court considered a Spokeo standing objection to a class action TCPA settlement made by a third-party objector. In other words, the case was already settled with both the Plaintiff and Defendant agreeing that the district court had standing to adjudicate and resolve the claims of class members. Yet a third-party challenged that standing to the Second Circuit Court of Appeal—apparently without any briefing on the issue by any other party.

Things get weirder. The Appellate Court actually concluded that the objector lacked standing to assert its objection—the objection was not yet ripe because the indemnity obligation underpinning the objection had not yet been triggered. Nonetheless, despite finding that the objection was invalid, the Court, nonetheless, considered the meat of the objection reasoning that a settlement entered without jurisdiction would be a pretty big no no.

In addressing the standing issue, the Court first concludes that receipt of an unwanted text message creates the very injury the statute was designed to prevent. See Melito at *15. (That is also a bit odd since, you know, text messages didn’t exist back in 1991 when the statute was enacted. No matter.) The Court identifies “nuisance” and “privacy violations” as the harms Congress sought to prevent in enacting the TCPA, overlooking that the entire legislative history of the TCPA deals with residential privacy—and an unwanted text message received on a mobile phone does not seem certain to intrude on such privacy interests.

Unsurprisingly, the Melito decision hues closely to the Third Circuit’s Susinno opinion where a single voicemail was likewise deemed sufficient to convey Article III standing.  As the Third Circuit had done before it, the Second Circuit panel concludes “because Plaintiffs have demonstrated a harm directly identified by Congress and of the same character as harms remediable by traditional causes of action, the district court correctly concluded that they ‘need not allege any additional harm beyond the one Congress has identified.’”

And, for real procedure nerds, there is one more fun piece to this decision. A second objector challenged that a class representative must affirmatively introduce evidence of receipt of a challenged text–thereby establishing standing– in order to be a valid class representative. The Plaintiffs had not introduced such evidence in connection with the class settlement but moved to supplement the record on appeal in order to overcome that challenge. Without addressing whether a class representative really must introduce evidence of standing affirmatively, the Second Circuit granted the Plaintiffs’ motion to amend the record, thus mooting the issue. What fun!

And just to complete the tie-in to Barker the Second Circuit Court of Appeals refused to consider the objector’s merits-based challenges to standing. See fn 6 (“Experian’s remaining arguments—whether the text messages in question were actually sent by an ATDS, whether absent class members ineffectively revoked consent, and whether the class is unascertainable—though framed as challenges to the district court’s subject-matter jurisdiction, actually attack the merits of Plaintiffs’ claims. Accordingly, we do not reach these issue.”)

The holding of Melito is hardly surprising—most of us have given up bringing Spokeo motions in TCPA cases– even though there is plainly a gap between the procedural mandate of the statute (calls must be invited) and the substantive harm to be avoided (receipt of unwanted calls) since not all uninvited calls will be unwanted–but watching the Second Circuit panel stretch for a basis to consider the standing issue and then swiftly dispatch of it is truly marvelous (for those of us that marvel at such things.)

At bottom, most courts–including the Second, Third and Ninth Circuit Courts of Appeal– have held that receipt of a single “unwanted” message is sufficient to confer Article III standing in TCPA cases. And casting a merits-challenge as a standing assault won’t fly in the Seventh or Second Circuit Court of Appeals, although it may earn you a dismissal in the D. New Mexico. Chat soon TCPAWorld.

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