Posted by Chris Alarie on Fri, 08/26/2022 - 14:13
Earlier this month, a district court in Washington ruled against Robinhood, the stock trading app and brokerage, in its attempts to get a text-message-based class action dismissed. What makes it especially notable is the class action is being brought under Washington’s Consumer Electronic Mail Act (CEMA) rather than the federal Telephone Consumer Protection Act (TCPA). In fact, the alleged text messages that form the basis of the lawsuit do not violate the TCPA but may well violate the CEMA.
The plaintiff’s allegations in Moore v. Robinhood center on Robinhood’s practice of marketing their platform by encouraging users to recruit friends and family to open Robinhood accounts. As a part of this process, the Robinhood app prompts the user to send a text message with a referral link. Again, this sort of practice does not open Robinhood up to any TCPA liability. But the plaintiff alleges that the CEMA’s “assistance” test makes it so that Robinhood should be considered the initiator of the violating texts due to the fact that it “established a chain of events” that lead to the messages being sent.
Robinhood moved for dismissal, citing TCPA-related precedents and arguing that the senders of the messages must be engaged in business in Washington to make the CEMA applicable. The court did not find these arguments persuasive and allowed the case, with its $500-per-violation damage claims, to proceed.
This case is a very illustrative example of the difficulties associated with maintaining compliance with both federal laws and the many, different state-level telemarketing regulations. Practices that may be legal under one regulatory regime may not be under another and, when there is a discrepancy, callers are held to whatever regulations are more restrictive. Practices that are legal under the TCPA may not be legal under state laws, and vice versa.