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$1.8 Billion TCPA Class Action . . . What is an Autodialer?

Tue, 05/09/2017 - 15:03

Can a text message platform that ONLY sends messages to a set list of numbers be considered an “autodialer” under the TCPA?

 

That was the $1.8 billion question brought before the District Court for the Northern District of Illinois. And yes, the plaintiffs were seeking nearly two billion dollars in damages. Now, after years of litigation, on May 4, 2017, the court issued its opinion on Nicole Blow vs. BIJORA, INC.doing business as AKIRA, a boutique women’s clothing and accessory store. It’s yet another convoluted case that spotlights the abuses by ruthless attorneys using the courts and the Telephone Consumer Protection Act (TCPA) as a means of enriching themselves. 

The Allegations

The Illinois TCPA lawsuit was filed in May 2011. Nicole Blow alleged that AKIRA's practice of sending promotional text messages violated the TCPA and the Illinois Consumer Fraud and Deceptive Business Practices Act and sought approximately $1.8 billion in damages. She stated that AKIRA, using a third party company, Opt It, sent text messages to consumers’ cell phones without obtaining their “prior expressed consent”. Ms. Blow claims that the text messaging platform used by Opt It was a prohibited automatic telephone dialing system under the TCPA.

Over a two-year period, Ms. Blow originally claimed to have received over 60 text messages without having provided “prior expressed consent”. After the filing, additional information was discovered which resulted in a modification to her position in court. She didn’t dispute that she had provided her phone number to receive messages about “discounts” from AKIRA. Her position was that she did not want to receive “mass marketing text messages”.

A Class Action Lawsuit in Search of a Plaintiff

From the beginning this case had a bumpy start. It took the TCPA attorneys three attempts to locate a suitable plaintiff.  After the case had been class certified, the court discovered that the original plaintiff in this case was also working as an attorney for Messer & Stilp, the law firm that filed the lawsuit. Recognizing the conflict of interest, the plaintiff was removed, but the attorneys had to act fast to keep it in the courts.

Armed with a certified class action lawsuit but no plaintiff to claim as a victim of TCPA compliance violations, the law firm sent an email to members of the class to find a replacement plaintiff. Once a new plaintiff was found, they filed an amendment to their claim designating their replacement plaintiff. As luck would have it, the new plaintiff turned out to be someone who had never received promotional text messages from AKIRA.

The search resumed until a third plaintiff was found in the person of Nicole Blow. She had received promotional text messages from AKIRA and a judge deemed her an “adequate” representative of those in the class. The only hiccup, which we discuss later, is that she may have actually consented to receive marketing text messages from AKIRA when she signed up for a customer VIP card to receive shopping discounts.

AKIRA’s Marketing Campaign (or Why This Platform Isn’t An Autodialer.)

Let’s begin by examining Opt It’s text messaging platform and how AKIRA used it for marketing to its customers.

Opt It was hired by AKIRA to send text messages to AKIRA customers to inform them of promotions, discounts, and in-store special events. Customers could opt-in to its “Text Club” in the following ways:

  1. Provide their cell phone numbers to AKIRA representatives inside stores
  2. Text the word “AKIRA” to an opt-in number posted in AKIRA stores
  3. Complete an “Opt-In Card.” Written on the card was the statement, “Information provided to AKIRA is used solely for providing you with exclusive information or special offers. AKIRA will never sell your information or use it for any other purpose.”

Once the cell phone numbers were provided by the customers, they were loaded to Opt It’s text messaging system. Cell phone numbers provided by customers at stores in writing were manually entered into the system by AKIRA employees while those provided by customer via text were sent directly to Opt It and automatically added to Opt It’s platform.

AKIRA then used Opt It’s web interface to manage promotional text messaging. AKIRA employees were responsible for drafting promotional messages and setting the delivery dates.

Between September 23, 2009 until May 27, 2011, AKIRA had collected over 20,000 cell phone numbers for its “Text Club”. During that same period, 60 text messages advertising store promotions and events were sent.

At issue in court was whether the software used by Opt It was capable of dialing numbers without human intervention and technically an autodialer.

A representative for Opt It clarified that their platform requires human action in order to send a message; noting that humans draft the messages, decide when they are sent and initiate delivery. It was also explained that the Opt It platform lacked the ability to store or produce random numbers and that modifying its software to do so would fundamentally alter the purpose of their platform.

Why Am I Confused by the Definition of an Autodialer?

The TCPA defines an autodialer 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 initially interpreted the TCPA autodialer ban as targeting equipment that dialed or generated randomly or sequentially generating phone numbers. For nearly a decade, the FCC has expanded this statutory definition to include “predictive” dialers and other devices that dial a fixed set of numbers without a random or sequential number generator. As technology and telemarketing methods have evolved and expanded, so has the FCC's definition of an autodialer.

  • In 2003, the FCC explained that “the teleservices industry has progressed to the point where using lists of numbers is far more cost effective” than random number generation.  The FCC observed that it needed to consider changes in technology. 
  • In 2008, the FCC concluded that “predictive dialers,” fell within the meaning and statutory definition of an autodialer and the intent of Congress. It affirmed that a predictive dialer constitutes an automatic telephone dialing system and is subject to the TCPA's restrictions on the use of autodialers.
  • In 2012, the FCC reiterated its earlier conclusion that the TCPA covered systems with the “capacity to store or produce and dial those numbers at random, in sequential order, or from a database of numbers.”
  • In 2015 FCC broadened the definition further. They stated that merely having the capability alone to store or produce, and dial random or sequential numbers, without any showing that such functionality had been utilized or even could have been utilized at the time the calls were made, would define whether equipment constitutes an autodialer.

As expected, their broadening of the definition of an autodialer increased the potential TCPA compliance liability for companies that used such equipment. It no longer mattered whether the functionality of the autodialer was engaged or if the equipment was used only to dial numbers from a client’s telephone lists.

The Court’s Judgement

The case against AKIRA dealt with two important issues:

  1. What constitutes the TCPA’s definition of an autodialer?
  2. What is the extent of “prior expressed consent”?

The court addressed the first point dealing with the definition of an autodialer based on the facts presented in this article.

Based on the testimony provided by Opt It and the capabilities of its platform, the court concluded that Opt It's software was not an autodialer. Their conclusion was based on the fact that human involvement was required at nearly every step in the platform's text message transmission process.

The court addressed the second point dealing with the extent of “prior expressed consent” based on the following facts.

The TCPA prohibits making “any call” without the prior express consent of the recipient “using any automated telephone dialing system” to “any telephone number assigned to a paging service [or] cellular telephone service.”

As mentioned earlier, Ms. Blow was an unusual selection to be the designated representative of a class of customers named in this lawsuit. The court records demonstrated that Ms. Blow gave her cell phone number to AKIRA on multiple occasions, therefore providing her “prior expressed consent” to receive marketing messages from AKIRA.

  1. Ms. Blow signed up for two AKIRA VIP cards, between 2009 and 2010, to earn gift certificates at certain spending thresholds. Both cards contained the following disclaimer: “INFORMATION PROVIDED TO AKIRA IS USED SOLELY FOR PROVIDING YOU WITH EXCLUSIVE INFORMATION AND SPECIAL OFFERS. AKIRA WILL NEVER SELL YOUR INFORMATION OR USE IT FOR ANY OTHER PURPOSE.”
  2. Ms. Blow's request that a sales associate call her when a particular pair of shoes was back in stock, as indicated in AKIRA’s notes.
  3. Ms. Blow admitted that she texted “AKIRA” to a short code on October 1, 2009 in order to opt-in to AKIRA's text program.

Further hurting her case was that Ms. Blow received 60 texts from AKIRA between September 23, 2009 and May 27, 2011. The first text AKIRA sent to her included instructions on how to be removed from Opt It's text messaging. She never followed the instructions to opt-out of receiving texts from AKIRA.

Ms. Blow argued that she never consented to AKIRA's texts because she “provided her phone number in order to receive discounts but not to receive mass marketing text messages”.  The court concluded that Ms. Blow cannot parse her consent to accept some promotional information while rejecting others.

The court decided that AKIRA had Ms. Blow’s prior “expressed written consent” when she offered her cell phone number specifically to receive AKIRA discounts. Both VIP cards contained Ms. Blow's name and cell phone number and clearly stated that her information would be used to provide exclusive information and special offers. Because the texts she received related to the purpose for which she provided her cell phone number, the court agreed that she provided “prior express consent” for the text messages.

The court granted AKIRA a summary judgment based on the courts determination that AKIRA, through Opt It, had not used an autodialer to send the promotional text messages to Ms. Blow and the other class members.

CONCLUSION

There is an old saying about not putting the cart before the horse. This case seemed to demonstrate a court process that is counterproductive to the intent of TCPA compliance law. The TCPA courts are supposed to defend individuals against abusive marketing practices, but in this case it encouraged judicial abuse by allowing a baseless case to move forward as a class action without any representative victim.

Ask yourself why the court would allow attorneys to fabricate victims of TCPA abuse and push forward a baseless $1.8 million dollar lawsuit. If attorneys need to work as hard as Messer & Stilp did to find a represented plaintiff, was their really a crime to defend against? When there are victims on a mass scale, as this case alleged, that requires a class certification, then victims should be easily discovered.

In truth, this case was filed by attorneys on behalf of attorney. The real victims were AKIRA, Opt It, and even Nicole Blow. She too was used in order to keep this baseless case alive. Ms. Blow was a significantly flawed representative of the class. Her attorneys must have known this from the onset and likely made hefty promises to keep her onboard in hopes of a large settlement from AKIRA.

Each year, thousands of lawsuits are filed against businesses that thought they were taking the necessary precautions to stay within the law of TCPA compliance for marketers. The TCPA’s intent was to protect consumers from illegal robocalls and abusive telemarketing practices. But defining dialer capacity to include future capabilities makes it unsafe for marketers to manually dial from any modern equipment unless it’s a rotary phone.

AKIRA followed the rules. As demonstrated in this case, consumers that sign up for a retailer’s promotional text campaign should not be surprised when they are notified about discounted products and upcoming sales events. For now, we can all hope that our politicians eventually conclude that the increase in TCPA lawsuits is indicative of an abused judicial system that is no longer intent on protecting consumers from truly abusive marketing practices. 

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