1. What Every Business Needs To Know about the TCPA
Gerald E. Arth
Steven J. Daroci

2. TCPA Fundamentals
Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227 (“TCPA”)
The TCPA regulates and restricts use of automated equipment to make unsolicited telemarketing calls or to send texts or faxes to residential telephone lines, cellular telephones, or fax machines
The Federal Communications Commission (“FCC”) prescribes rules and regulations to implement and interpret the TCPA
The TCPA permits recipients of unlawful calls, texts, or faxes to bring a private cause of action to seeks injunctive relief and/or damages
TCPA liability is UNCAPPED – actual damages or statutory damages ranging between $500 and $1,500 per violation
Cottage industry of class action lawsuits 2

3. Key TCPA Restrictions Calls to Cellular Telephone Lines
The TCPA prohibits making any call to a cellular telephone line using an automatic telephone dialing system (“ATDS”) or artificial or prerecorded voice unless the call is for emergency purposes or made with the prior express consent of the called party
Applies to text messages as well as voice calls
Applies to transferred or reassigned cellular telephone numbers
Calls to Residential Telephone Lines
The TCPA prohibits initiating any marketing call to a residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party
Unless the call is for emergency purposes or made solely to collect a debt owed to or guaranteed by the federal government
Telemarketing calls to residential lines can be made using an ATDS without prior consent
Faxes
The TCPA prohibits using a fax machine, computer, or other device to send any unsolicited advertisement to a fax machine unless the sender has an established business relationship with the recipient, the recipient voluntarily made the fax number available, and the unsolicited advertisement contains a compliant opt-out provision 3

4. Remedies for TCPA Violations
Potential TCPA damages can be astronomical, especially in class actions
Private right of action can be brought in state or federal court
Can get injunctive relief and/or damages
Damages are actual monetary or $500 for each violation, whichever is greater
Damages are UNCAPPED – no limit
If violation is willful or knowing, court has discretion to treble damages
TCPA does not permit recovery of attorneys’ fees 4

5. Remedies for TCPA Violations
EXAMPLE: P claims D made 100 calls to P’s cellular telephone number without P’s prior express written consent. After first 10 calls, P expressly directed D to stop calling, but calls continued. P brings individual suit and claims damages of $5,000 for first 10 calls (10 calls x $500) and damages of $135,000 for remaining 90 calls (90 calls x $500, then trebled due to willful or knowing violation by D) Total for 100 calls: $140,000 5

6. Remedies for TCPA Violations
EXAMPLE: P claims D sent text messages to cellular telephone numbers of P and approximately 10,000 others as part of a promotional marketing campaign. P claims the texts were sent without prior express written consent. P brings a purported class action on behalf of P and all other recipients of the text messages. Each member of the class received an average of 5 text messages  P claims total class damages of $25 million (50,000 texts x $500), with potential trebling to $75 million 6

7. Exceptions to TCPA Liability
Prior Express Consent
Current FCC rules require “prior express written consent” for any telemarketing or promotional calls or texts to wireless numbers made using an ATDS or for telemarketing calls to wireless numbers or residential landlines using an artificial or prerecorded voice
Prior express written consent not needed for non-telemarketing and non-advertising calls – must only show prior express consent through called party giving his or her wireless number to the person initiating the call or text
 Emergencies
Emergency exception to TCPA liability applies to calls to both wireless numbers and residential landlines
Broadly applies to any messages “necessary in any situation affecting the health and safety of consumers,” e.g., messages from schools or health care institutions
No prior consent required; calls/texts can be made or sent using an ATDS or artificial or prerecorded voice 7

8. The Role of the FCC FCC’s Rulemaking Authority
FCC’s rulemaking authority explicitly set forth by Congress
In its statutory findings, Congress envisioned a large role for the FCC in fashioning rules to strike a balance between protecting consumers’ privacy and permitting legitimate telemarketing
Section 227(b)(2) of the TCPA authorizes and requires the FCC to promulgate implementing regulations
The FCC is also authorized under the TCPA to exempt certain calls from prohibition 8

9. The Role of the FCC National Do-Not-Call Registry
National Do-Not-Call Registry (“NDNCR”) established by FCC in 2003
If telephone subscribers place their personal phone numbers on the NDNCR, telemarketers may not call them unless either: (i) there is an established business relationship with the consumer; or (ii) the consumer gives express written consent
The NDNCR’s restrictions apply only to telemarketing calls made by or on behalf of sellers of goods or services, and not to charitable or political fundraising calls
Telemarketers must stop making calls to numbers on the NDNCR within 31 days of when a number is added to it
The NDNCR provisions of the TCPA include a safe harbor defense if a company can demonstrate both that: (i) the call was made in error and (ii) the company meets specified routine business standards, such as having written compliance procedures, training, recordkeeping and a process to avoid violation calls
Companies are also required to maintain internal lists that include the phone numbers of consumers who have asked not to be called again 9

10. When is Consent Required?
Technology Used
Nature of Contact with Consumer
Telemarketing
Informational
Political
Tax Exempt Non-Profit
Emergency
Cellphone
Auto-dialed calls/texts
Prior express written consent
Prior express consent, oral or written
None required
Artificial or prerecorded voice
Residential landline
Auto-dialed calls
Facsimile
Prior express permission or established business relationship required, plus sender must provide opt-out notice

11. When is Consent Required?
(1) For residential landline phones, do calls use an artificial voice or prerecorded message?
IF NO  the TCPA does not apply. The TCPA does not prohibit the use of an ATDS to call residential phones
IF YES  See (3) below
(2) For cell phone calls, do calls use an artificial voice or prerecorded message or an ATDS?
IF NO  the TCPA does not apply
If YES  proceed to (3) below
(3) Does the call contain “telemarketing”?
IF NO  the written consent rules do not apply, but either oral or written consent is still required for calls made to cell phones, regardless of content. Consent may also be required for residential calls if an exemption does not apply
IF YES  written consent is required prior to initiating the telemarketing call
Veronique Tu, Christine M. Reilly and Michael Mallow; “They’re Here: The FCC’s New Regulations Under the TCPA - Now What?”; Association of Corporate Counsel; 11

12. What is an ATDS?
One of the least clear and most divisive issues under the TCPA
The TCPA defines an automated telephone dialing system as “equipment which has the capacity: (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers”
The FCC has taken an increasingly expansive view, holding that almost any predictive dialer qualifies as an ATDS and clarifying that the question of “capacity” refers to a system’s “potential capacity”
Given that the use of an ATDS is an element of a TCPA claim, it is not sufficient for plaintiffs to recite that fact verbatim without other supporting details. Rather, a plaintiff must plead additional, independent facts that suggest beyond the speculative level that a defendant actually used an ATDS and is liable under the TCPA
Although a TCPA plaintiff is not be expected to plead details regarding the technical functionality of the alleged ATDS, the complaint must include at least some facts to support the conclusion that an ATDS was used, such as a description of the promotional content of the call, the generic, the impersonal nature of the text message allegedly sent using an ATDS, or that identical messages were sent to many potential customers at the same time 12

13. What Does the Future Hold for TCPA Liability?
The primary battlegrounds over the TCPA continue to be the FCC and the Circuit Court of Appeals for the District of Columbia
A significant case argued on October 19, 2016, ACA Int’l v. FCC, No (D.C. Cir.) presents a number of challenges to the FCC’s July 15 omnibus declaratory ruling, with issues to be decided including:
what “capacity” equipment must have in order to be deemed an ATDS, i.e., whether the focus be on present or potential capacity;
whether prior express consent of a “called party” only must come from the “intended recipient” of a call, or whether the term “called party” encompasses any user of the number, whether the intended recipient or not (and including users of reassigned numbers); and
whether the consumers can revoke consent to receive calls “using any reasonable method,” a right which cannot be waived or limited by contract 13

14. Defending TCPA Claims Compliance
Best defense is a robust TCPA compliance program
Failing to develop, enforce and document an effective TCPA compliance program is an invitation to disaster
The TCPA is virtually a strict liability statute
Significant potential for outsized damages
Generally no coverage under standard CGL policies – many now specifically exclude TCPA claims
Jurisdiction – remove to federal court if claim brought in state court 14

15. Defending TCPA Claims Factual Investigation
Preserve and review complete records of client’s calls/texts/faxes
Understand technology involved in making or sending the calls/texts/faxes – engage experts to assist as needed to determine whether ATDS used
Analyze any records of plaintiff giving or revoking consent
Research plaintiffs and their counsel – look for professional plaintiffs and quick-hit counsel 15

16. Defending TCPA Claims Legal Defenses
Arbitration clause in operative documents
Lack of standing
No Article III standing – Spokeo
Prudential standing, especially with professional plaintiff
No use of ATDS or artificial or prerecorded voice
Prior express consent
Lack of plausibility – Twombly/Iqbal
Emergency exception 16

17. Defending TCPA Claims Class Actions
Plaintiffs must satisfy requirements of Fed. R. Civ. P. 23
Rule 23(a) requirements: numerosity; commonality; typicality; adequacy of representation
Rule 23(b)(3) requirements: predominance of common questions over individual ones and superiority of class action over other available methods
Motion to dismiss stage
Lack of standing
Possible motion to strike class allegations (e.g., fail-safe class definition)
Motion for class certification
Predominance of individual issues
Lack of class ascertainability
Possible “pick off” of class representative
Individual settlement
Rule 68 offer of judgment leading to moot claim (doubtful after Supreme Court’s recent Campbell-Ewald decision) 17

18. Recent Notable TCPA Settlements
$15 million
$10.5 million
$56-76 million
$10.5 million
$9 million
$16.3 million
$14.5 million
$7 million
$8.5 million
$35 million 18

19. Dos and Don’ts for Avoiding TCPA Liability
develop, document and enforce a TCPA compliance program
obtain prior express written consent before initiating or sending telemarketing calls or texts to consumers
provide one or more opt-out mechanisms
require third-party vendors or marketing partners to comply with TCPA
keep “informational” messages content-neutral
make consent forms clear, conspicuous and consumer friendly
keep all records of consent for at least four years
See Bradley M. Baglien, Heather Zachary and D. Reed Freeman Jr.; “TCPA Do’s and Don’ts: Lessons Learned From the Recent Litigation Wave and FCC Order”’ July 2, 2015; 19

20. Dos and Don’ts for Avoiding TCPA Liability
fail to keep up with developments in TCPA regulations
assume that past consent remains valid in perpetuity
place unnecessary restrictions on the scope of consent
assume that a device is not an ATDS
assume that use of a third-party vendor insulates you from liability
See Bradley M. Baglien, Heather Zachary and D. Reed Freeman Jr.; “TCPA Do’s and Don’ts: Lessons Learned From the Recent Litigation Wave and FCC Order”’ July 2, 2015; 20