TCPA’s DNC Provisions Deemed “Model of Clarity:” Fourth Circuit Court of Appeal Affirms $61MM Judgment Against Dish—Suggests TCPA DNC Cases Should Be Commonly Certified

Wow. This one is big, and odd, and wonderful in a scary sort of way.

Rarely does a Circuit Court of Appeal decision advocate the benefits of class certification under a statute. While the elements of a statutory claim are properly reviewed and analyzed in a certification ruling, most often a Circuit Court of Appeal reviewing a certification decision will stop short of considering the merits of class members claims as linked to the definition of a statute in a manner that can be viewed as encouraging certification of such actions. Well that mold was broken–and in a big way–by the Fourth Circuit Court of Appeal’s new Krakauer ruling. And the fallout is difficult to calculate.

Owing  to its odd procedural posture, the Fourth Circuit Court of Appeal decision in Krakauer v. Dish Network, No. 18-1518, 2019 U.S. App. LEXIS 16111 (4th Cir. May 30, 2019) offered a rare opportunity for a Circuit Court to pass on the merits of certifying a case under the TCPA—rather than just approving the specific certification decision made by a district court. And boy the panel not shy away from the opportunity. In a ruling that repeatedly applauded the TCPA’s DNC provisions—calling the DNC provisions of the TCPA a “model of clarity” and lauding the TCPA’s private right action as a “straightforward provision designed to achieve a straightforward result”—the Court concludes that the TCPA’s DNC provisions offer a near-perfect vehicle for certification: “[a]t bottom, the advantages of class resolution follow directly from the statute… [it] creates a simple scheme for determining if a violation occurred, whether a defense is available, and what the damages ought to be.”

Oh. Man. As my Uncle Rich likes to say–the price of poker just went up folks.

And when considering the merits of the Defendant’s appeal, the Court summed matters up as if any effort to defeat certification in DNC TCPA class actions is a mere effort to thwart the Congressional intent behind drafting the statute:

It would be dispiriting beyond belief if courts defeated Congress’ obvious attempt to vindicate the public interest with interpretations that ignored the purpose, text, and structure of this Act at the behest of those whose abusive practices the legislative branch had meant to curb.

This will  not happen.

Holy smokes folks. Where’s my Gandalf the Gray meme when I need it?

Well, let’s break this thing down.

Some quick background. Dish was sued for purported DNC violations, allegedly calling class members on the DNC without the required consent or EBR. Class members allegedly received more than one call during any 12 month period, as required by the statute. The calls were allegedly made by agents of Dish to sell Dish’s product. The Court certified a class of these individuals and the jury returned a verdict on these points against Dish. The Court then trebled damages and entered a judgment against Dish in the amount of $61MM, following a protracted post-trial process that, largely, fell outside the scope of the appeal.

Within the scope of the appeal was: i) whether class members had Article III standing; ii) whether the court properly certified the case since many class members were non-subscribers who lacked standing to assert the claim and cannot be ascertained; iii) whether the calls were made by agents of Dish; and iv) whether the court properly found that Dish acted willfully. Each of these issues is easy enough to address without the grandstanding pro-certification sermon the Fourth Circuit panel elected to provide—but, sermon received nonetheless.

Starting with Article III standing the Court had little problem determining that receipt of a telemarketing call after a number was registered on the DNC affords Constitutional standing to sue. In the Court’s view, the class definition hewed tightly to the language of the TCPA’s cause of action, and that statute itself recognizes a cognizable constitutional injury. As the Court puts it: “Put simply, the TCPA affords relief to those persons who, despite efforts to avoid it, have suffered an intrusion upon their domestic peace.” Eesh.

In the Court’s view, all that is needed to have standing is that an individual receive a call on his own residential  number, a call that he previously took steps to avoid.” (Remember this language—it’ll be disregarded in about 20 seconds). Accordingly the Fourth Circuit finds that essentially everyone in the class has Article III standing, so there’s no issue of ascertaining uninjured class members.  (Notably the Fourth Circuit suggests, but does not hold, that absent class members must possess Article III standing—an issue that remains open in the Fourth Circuit.)

Moving on to ascertainability the Court begins its analysis by noting that the private right of action in the TCPA’s  § 227(c)(5) offers “many advantages for class-wide adjudication.” Uh oh. In the Court’s view, class data will easily demonstrate whether a phone number was called, whether it was on the DNC, what the purpose of the call was and “other relevant issues, such as the existence of a business relationship between the solicitor and the recipient of the call”—can all be proven by records kept by the defendant company.

In fairness, the Krakauer facts do present a scenario where much classwide data was available and commonality was mostly present. Thus Dish was left arguing that the class should not be certified because it was overly broad and included call recipients and not just subscribers.  Not necessarily the best place to be.

The Fourth Circuit cut this argument off at the pass holding that the class was not overly broad to begin with because the private right of action allows suit by any “person” who “received” calls—not just subscribers. In so finding the Court expressly rejected Dish’s argument that since only the subscriber can list a number on the national DNC only the subscriber can assert a claim under the TCPA’s DNC provisions. In the Court’s view the statutory language is clearly broad enough to include claims by users of phone lines, not just subscribers. So Dish’s chief predominance/ascertainability challenge evaporates.

But wait a minute. Literally just a few paragraphs earlier in the ruling the Court had found that all class members had Article III standing because they all had registered their “own” number on the DNC and had taken their very own effort to avoid such calls. But now, in order to avoid a predominance challenge, the Court performs an about face and suggests that class members need not be the individuals that actually registered their number on the DNC and, indeed, do not even have to be the subscriber to the number in the first place. Huh?

Inconsistent though those positions may be, that was the Court’s reasoning and it, thus, affirmed the district court’s certification ruling.

Moving on to the vicarious liability challenge, the Court had little trouble affirming the jury’s determination that the calls had been made by Dish’s agents.  Teeing up the issue: “under traditional agency law, an agency relationship exists when a principal “manifests assent” to an agent “that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents so to act.”  The jury found that Dish had the right to control SSN—the company making the calls at issue— and the Appellate Court was not going to reverse that ruling. The evidence supporting the finding was:  i)  provisions of the contract between Dish and SSN affording Dish broad authority over SSN’s business, including what technology it used and what records it retained; ii) SSN was authorized to use Dish’s name and logo in carrying out its operation; iii) the jury had before it the Voluntary Compliance Agreement that Dish entered into with 46 state attorneys general, wherein Dish clearly stated its authority over SSN with regard to TCPA compliance.

The Appellate Court also took issue with Dish’s purported “failure” to respond to concerns that SSN was violating the TCPA “in any serious way and was profiting handsomely from SSN’s sales tactics.” (This calls to mind the Ninth Circuit’s ruling on ratification, although Krakuaer was decided in the agency context.) Dish’s arguments that it sincerely tried to prevent TCPA violations fell on deaf ears:  “it does not matter whether Dish now believes its argument to be convincing. Dish had its chance to persuade the jury, and it lost.” Ouch. That’s cold.

Finally the appellate court had no problem with the district court’s decision to treble damages because, again, Dish had the right to control SSN, knew of TCPA violations and did nothing meaningful to prevent them. On this evidence the district court was justified to conclude that Dish had acted willfully and exercised its discretion properly to treble damages.

More than a few take aways here:

  1. Do not bring Spokeo challenge to the TCPA in the Fourth Circuit ever again;
  2. Krakauer plainly advocates for certification of TCPA DNC class actions in a manner that will pose new and—seemingly unnecessary—challenges to Defendants seeking to pose ascertainability challenges in these cases. (Then again, as I recently wrote, focusing on ascertainability in opposing TCPA class certification is rarely a winning strategy anyway.)
  3. Krakauer appears to bless class definitions that track closely with the elements of the statute—raising serious failsafe concerns.
  4. The “right to control” continues to be a buzzword in TCPA class actions seeking to impose liability for calls made downstream from a defendant. If you hope to avoid calls made by partners and vendors you need to keep this reality in mind.
  5. Knowledge of violations by individuals your entity controls is all that a court needs, apparently, in order to find that you have willfully violated the TCPA. Scary stuff TCPAWorld.

But, at bottom, what Krakauer really demonstrates is just how hostile courts have become to the pleas of telemarketers and others that—allegedly—make calls in violation of the TCPA. To the extent you are not doing so already you must take DNC, TSR, TCPA compliance seriously. And with the TRACED act passing the Senate, enhanced regulatory scrutiny is just around the corner. The combination of sympathetic courts and aggressive agency enforcement is a perfect TCPAWorld storm.

Keep your head up folks. We’re here to help.