TCPA Decisions in 8th and 9th Circuits Favor Defendants
A 9th U.S. Circuit Court of Appeals ruling on automatic dialing systems in Borden v. Efinancial (docket 21-35746) has likely narrowed the range of possible TCPA cases in that circuit, and an 8th Circuit panel upheld a lower court ruling narrowly defining what sort of fax constitutes an unsolicited advertisement in BPP v. Caremark CVS (docket 21-3791), in opinions issued this week. The Telephone Consumer Protection Act’s prohibition against the use of automatic dialing systems applies only to automated systems that generate telephone numbers, not to other systems that use random or sequential number generation to select from a list of numbers to call, said the 9th Circuit.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The Borden case concerns marketing text messages sent to David Borden by Efinancial after he submitted his information to receive insurance quotes on Progressive.com. The link to receive the quotes included a small print disclaimer authorizing Efinancial to send “autodialed, prerecorded calls, SMS or MMS messages” to users. Borden’s complaint argued that Efinancial uses a number generator to pick which phone numbers in its database are sent the marketing messages, and that this constituted a prohibited automatic dialing system under the TCPA. The district court dismissed the case and ruled that the system isn’t an autodialer, and the 9th Circuit agreed. “We hold that an ‘automatic telephone dialing system’ must generate and dial random or sequential telephone numbers under the TCPA’s plain text,” wrote Judge Kenneth Lee in the unanimous opinion.
Attorneys and entities that frequently side with TCPA defendants lauded the Borden decision. “And boom. ATDS cases are DEAD in the Ninth Circuit’s populous footprint (that includes all of California, Oregon and Washington),” said TCPA attorney Eric Troutman in a blog post Thursday. “Good news out of the Ninth Circuit today,” said the U.S. Chamber Litigation Center in a tweet Wednesday. The theory that the use of a random number generator to pick from a list of submitted telephone numbers is the same as using an automated dialing system is “contrary to the text of the statute, ordinary principles of grammar, and the Supreme Court’s decision” in Facebook v. Duiguid, said the Chamber in an amicus brief in the Borden case. In Facebook v. Duiguid, the high court narrowly defined what constitutes an automatic dialer.
A 9th Circuit ruling in the 2018 case, Marks v. Crunch San Diego, had taken a broad view of the definition of an autodialer, but Wednesday’s ruling “acknowledges the limitations” created by the SCOTUS decision in Facebook, said Kelley Drye TCPA attorney Becca Wahlquist in an interview. Nothing in the SCOTUS opinion “suggests that the Court intended to define an autodialer to include the generation of any random or sequential number,” said Lee’s opinion Wednesday. “While we all wish for fewer calls and messages from marketers, we are limited to the bounds of the TCPA.”
The 8th Circuit BPP decision narrowing the definition of an unsolicited advertisement fax is also a boon to TCPA defendants, because the damages for unsolicited faxes -- these days mostly limited to the medical profession -- are the same as for phones, said Wahlquist. The court’s ruling requires faxes to have specific commercial purposes to be considered unsolicited ads, Wahlquist said.
The case concerns a fax sent by Caremark -- which manages pharmacy benefit plans for entities such as insurers -- to St. Louis, Missouri, periodontal care provider BPP about options related to supply limits on opioid prescriptions. BPP argued the fax was an unsolicited ad and sued, but the lower court granted a motion for summary judgment by Caremark. The 8th Circuit affirmed the lower court decision.
Caremark doesn’t sell goods or services to doctors or their patients, and so couldn’t have intended the fax as an ad to get BPP to pay for products, said the 8th Circuit ruling. Nebulous economic benefits such as good will or brand awareness could apply to any fax, and aren’t enough to brand a message as an unsolicited ad, the court wrote. “To consider a fax to be an unlawful advertisement on the basis of a remote or minor commercial purpose would vastly broaden the TCPA’s definition of unsolicited advertisement,” said the majority opinion, from Judge Raymond Gruender.