Does Your Company Make Calls or Send Texts on Behalf of Others? Some TCPA Relief Has Arrived

Published On March 9, 2015 | By Anna Hsia | General, Litigation

Companies who call customers or send text messages to customers are abundantly aware of the potential risk under the Telephone Consumer Protection Act (“TCPA”). Increasingly, lawsuits are being filed against other companies that are simply facilitating the voice or text messaging campaign. For some who merely transmit voice calls or text messages on behalf of businesses, a recent district court decision might stem frivolous TCPA lawsuits.

On February 24, 2015, a Washington state district court in Rinky Dink, Inc. v. Electronic Merchant Systems, et al. granted summary judgment for defendant CallFire, a company that provides voice and text connectivity products to businesses. Plaintiffs sued defendants Electronic Merchant Systems (“EMS”) and CallFire, alleging that they made pre-recorded telemarketing calls without prior consent. CallFire’s involvement was limited—it merely provided an online platform through which customers could design calling or texting campaigns. CallFire customers dictated the content, the recipients, and the timing of the messages or voice calls. Customers could also build in CallFire functionality into their own applications by using CallFire APIs.

Plaintiffs sued CallFire, notwithstanding CallFire’s limited involvement. Plaintiffs alleged that CallFire violated the TCPA and the Washington Automatic Dialing and Announcing Device by initiating prerecorded calls without prior consent. The district court granted summary judgment, finding that CallFire was a common carrier that was exempt from TCPA liability. The most basic and traditional example of a common carrier is a telephone company. The TCPA does not apply to common carriers like telephone companies, because they do not “initiate” any call or send any message—they merely transmit a call or message initiated by others. By statutory design, common carriers can only be liable under the TCPA where they have a “high degree of involvement or actual notice of an illegal use and failure to take steps to prevent such transmissions.”

CallFire contended it was a common carrier because, among other things, it had filed paperwork with the FCC categorizing itself as a domestic, interstate communications common carrier. Plaintiff disputed CallFire’s status as a common carrier arguing, among other things, that the FCC had not formally acknowledged CallFire to be a common carrier. The court agreed with CallFire, finding CallFire to be a common carrier, because CallFire (1) offers its services indiscriminately to the public under the same terms and conditions; and (2) allows its customers to transmit messages of their own design and choosing. The decision focused mostly on the second point—whether CallFire merely facilitated calls and messages of the user’s “own design and choosing.” The court noted that CallFire did not control theTCPA CallFire content, timing, or recipients of the messages—rather “EMS drafted the message, hired an actor to record the message, selected the phone numbers to be called, and chose the locations and timing of the calls.” As a common carrier that otherwise did not have a “high degree of involvement” in the messages or “actual notice” of an illegal use, the court granted CallFire’s motion for summary judgment on the TCPA claims. The court likewise granted summary judgment on the Washington state claims, finding that CallFire did not “initiate” any allegedly unlawful calls. Though the case involved only prerecorded calls, the district court noted that CallFire also sent text messages on behalf of businesses, and the court’s determination of CallFire’s common carrier status should apply equally to CallFire’s texting practices.

For businesses that facilitate the transmission of voice calls or text messages on behalf of other businesses, this opinion sketches a roadmap to reduce risk. Though the decision may reduce the amount of frivolous TCPA litigation against intermediaries like CallFire, it’s worth noting that (1) this action was filed in July 2013, involving CallFire in litigation for over a year and a half; and (2) CallFire’s initial motion to dismiss on similar grounds was denied, as the court held that plaintiffs could obtain discovery on whether CallFire was indeed a mere intermediary. The FCC may weigh in on this and other issues involving intermediary liability under the TCPA. Until then, this case will hopefully deter the initiation of lawsuits against companies that merely facilitate calls and messages on behalf of others.

Photo from Seattle Municipal Archives from Flickr

About The Author

Anna Hsia maintains a diverse practice litigating complex business disputes and counseling clients on privacy issues. With broad litigation experience in unfair competition, false advertising, class actions, and other complex litigation, Anna guides clients through disputes in federal and state courts. As a Certified Information Privacy Professional, Anna has assisted clients with product development and compliance with privacy regulations such as the TCPA, HIPAA, COPPA, state-specific privacy regulations, the Gramm-Leach-Bliley Act, and the Fair Credit Reporting Act.

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