ALL IN: Public Company Appears to be Betting it All on Long-Odds Appeal (But a Win Would be SWEET!)

This may be the most interesting story I’ve ever had the opportunity to cover on, if only because the stakes appear so high.

So the other day the Marcioness–isn’t she great?--wrote that compelling story on TCPAWorld’s version of Dr. Evil. He was the guy who–rather brilliantly but also rather nefariously–downloaded hundreds of thousands of user profiles off of Porch’s website and then used it to do targeted social media advertising to collect TCPA Plaintiffs and set up a series of high-dollar claims against Porch.

Indeed, the guy claims Porch owes over $10BB for TCPA violations (the company presently has a market cap of $1.9BB which–according to “Dr. Evil”–means that Porch has a value of about negative $8BB, and also means the TCPA is totally constitutional.)

So as the Marcioness explained, Porch tried to have “Dr. Evil” sanctioned for his activities but the Court pretty much shrugged in its general direction since he didn’t violate any laws (the website was apparently just poorly set up, leading to public access to sensitive information.)

But there’s one piece to the story that we haven’t covered yet. Porch successfully moved to stay the “Dr. Evil” suit awaiting the Ninth Circuit’s appeal in Chennette.

You might remember Chennette as the case where I had to carefully word a blog to avoid saying that it was just flat wrongly decided. 

The decision held that users of cell phones that are held out as business numbers simply do not have standing to sue for ATDS or prerecorded calls to their cell phones. While that argument might have some merit where a business pays for the cell phone–in most instances courts find that the regular user of a phone does have standing to sue even if they are not the subscriber but that’s a legitimate argument–the idea that a subscriber to a cell phone line lacks TCPA protection just because the phone is used for business purposes is…. novel.

So anyway that is what Chennette held and it is classically the case that Defendant was lucky to win and really should never have been appealed because bad things tend to happen when you look the old gift horse in the mouth. Just ask Fraser Financial.

So whereas Chenette is a case where the Defendant seemingly should have been grateful for a win but avoided a costly appeal that was sure to even in reversal at all costs, it looks like Porch is bucking conventional wisdom and has elected to go all in on it. Not only has Porch pursued the appeal to the Ninth Circuit, it has successfully moved to stay the “Dr. Evil” case, and presumably many others on the basis of the appeal.

It’s a real “all in” moment for Porch here. If the Chenette appeal is unsuccessful Porch will have misfired a giant cannonball here and will really be mired in a pile of litigation moving forward. Of course if it wins–then it wins all.

High stakes poker.

Scanning Porch’s Chenette brief–found here Porch Appellate Brief–there’s a real kitchen-sink element to this thing. But if any of these arguments stick it would really be a remarkable win and change the TCPAWorld. Here are the lead arguments (with my thoughts):

  • Business cell phone users are not within the zone of interest protected by the TCPA (as noted, seems like a long shot–but would be cool);
  • Business cell phone users who publish their telephone number in public sources cannot sue under the TCPA because they lack Article III harm (maybe, but again seems like a long shot);
  • An ATDS was not used to send the texts (this is the winning argument post-Facebook, but unclear whether this issue was sufficiently developed below to be argued on appeal);
  • The messages are not advertisements (good argument, but probably doesn’t matter in this context as consent is needed either way if an ATDS was used);
  • Plaintiffs provided express consent to receive automated text messages by publishing their phone numbers publicly (This would be incredible but…ummmm);
  • The TCPA is unconstitutional via Creasy.

You’ll notice the last argument is a play for Creasy. Since Perez just settledChenette is the only case that is currently raising the argument in front of the Ninth Circuit (that I am aware of at least). I really hate seeing Creasy lobbed into this brief in a one page throwaway argument tacked on to a disjointed section–seems destined to get rejected and damage any shot at a fully-briefed First Amendment challenge to the TCPA post-AAPC. But you can’t blame Porch for including the argument, I guess.

It will obviously be very interesting to see how Chenette turns out. There may literally be billions riding on it–and again, Porch’s executives are personally named in at least some of these cases. So there is much on the line.

But more broadly there are a bunch of novel arguments being raised here–which is why I wanted to bring it to everyone’s attention. While I have my doubts, if Porch pulls off a win in Chenette it could turn out to be one of the biggest decisions in TCPAWorld history and really turn things around for defendants in these suits.

So to a degree, we are all “all in” on this one.

We’ll keep a close eye on this.


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