New Telephone Consumer Protection Act: Boon or Bane to Your Company?

Speaker Firms and Organization:

Vinson & Elkins LLP Jason A. Levine

Partner

Perkins Coie LLPDebra R. Bernard

Partner

Troutman Sanders LLPChad R. Fuller

Partner

Hall, Render, Killian, Heath & Lyman, P.C.Lea H. Lockhart

Attorney

Hall, Render, Killian, Heath & Lyman, P.C.Joshua P. Reading

Attorney

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Presented By:

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Partner Firms:

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mailto:[email protected]

Partner Firms:

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With more than 900 lawyers in 19 offices across the United States and Asia, Perkins Coie is a leading international law firm that represents great

companies across all industries and stages of growth—from start-ups to FORTUNE 50 companies. Perkins Coie's over 100-year tradition of

partnering with our clients to build great companies has earned our firm the privilege of representing industry-leading clients such as Amazon.com,

Microsoft, Boeing, Intel, Google, Starbucks and Honeywell, to name just a few.

For almost a century, Vinson & Elkins lawyers have provided innovative business solutions for clients whose needs are as diverse as the entities

they represent. In today's challenging environment of global markets, volatile economies, and complex human and environmental issues, our law firm's

time-tested role as trusted advisor has become even more critical. The depth and breadth of V&E lawyers' experience, combined with the responsiveness and efficiencies of the firm's global reach, enables Vinson & Elkins to serve

clients from start-up, to the negotiating table and boardroom, before legislative and regulatory bodies, in the courtroom, and beyond.

Partner Firms:

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Troutman Sanders LLP is an international law firm with more than 600 lawyers and offices located throughout North America and Asia. Founded in

1897, the firm’s lawyers provide counsel and advice in practically every aspect of civil and commercial law related to the firm’s core practice areas:

Corporate, Energy and Industry Regulation, Finance, Litigation and Real Estate. Firm clients range from multinational corporations to individual

entrepreneurs, federal and state agencies to foreign governments, and non-profit organizations to businesses representing virtually every sector and

industry. See troutmansanders.com for more information.

Hall, Render, Killian, Heath & Lyman is a national health law firm with offices in Indiana, Kentucky, Michigan and Wisconsin. The firm provides

organizations in the highly regulated health care industry with full service legal representation. With more than 160 attorneys, Hall Render represents over 500 health care organizations, including hospitals and health systems,

physician practices, life sciences firms and nonprofit organizations. Hall Render focuses its practice in health law and is recognized as one of the

nation's preeminent health law firms. Learn more at www.hallrender.com.

http://theknowledgegroup.org/%22http://www.troutmansanders.com//%22

http://www.hallrender.com/

Brief Speaker Bios:

Jason A. Levine

Jason A. Levine is a litigation partner in the Washington, D.C. office of Vinson & Elkins LLP. A versatile courtroom lawyer for over 15 years, Jason represents clients in their most important business disputes and has tried 10 complex cases to juries and the bench. He defends against class actions and serves as lead counsel in cases involving contracts, business torts, antitrust claims, and e-commerce statutes including the Telephone Consumer Protection Act. A noted authority on high-tech litigation risks, Jason has been recognized as a Washington, D.C.Super Lawyer, as a "Future Star" by Benchmark Litigation, and by Lawdragon magazine as among the top 3,000 attorneys in the United States. Jason received his J.D. in 1994 from Harvard Law School, and his B.A. in 1991 from Brandeis University.

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Debra R. Bernard

Debra is a seasoned litigator whose practice encompasses the litigation, arbitration and mediation of all types of intellectual property claims including Lanham Act actions, trademark infringement, trade dress infringement, misappropriation of trade secrets, copyright infringement, patent infringement, right of publicity as well as general commercial litigation claims. Debra also has experience in the litigation and arbitration of Telephone Consumer Protection Act (TCPA) class actions and advises clients on TCPA compliance issues. Additionally, Debra advises clients on litigation readiness and ediscovery protocols, serves as an active member of the Seventh Circuit E-Discovery Pilot Program Committee and is an adjunct professor at Chicago-Kent Law School.

Brief Speaker Bios:

Chad R. Fuller

Chad is a partner in the financial services litigation practice of Troutman Sanders LLP, where he focuses on the defense of consumer class actions and general business litigation.Chad has substantial experience defending major consumer class action litigation in cases involving alleged false advertising, product defects, charging for fees and services by a variety of businesses, including computer, software, telecommunications, home warranty, insurance brokerage, and auto finance companies. He is well versed in California’s Unfair Competition Statutes, including Business & Professions Code Section 17200. He has tried cases to verdict before courts and private arbitrators and has substantial experience in mediation.

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Lea H. Lockhart

Lea Lockhart practices in the area of health care law with a focus on health information technology, general business transactions and services, privacy and security and electronic health records. Prior to joining Hall Render, Lea graduated from Saint Louis University School of Law and earned a Master of Health Administration from Saint Louis University College for Public Health and Social Justice. She completed a fellowship at Saint Louis University Hospital and assisted the hospital in researching business and transactional matters, such as physician arrangements, hospital and physician liability, certification and licensure issues and medical staff matters and credentialing. Lea was also a lead editor for the Saint Louis University Journal of Health Law & Policy and interned at MetroHealth Medical Center in Cleveland, Ohio.

Brief Speaker Bios:

Joshua P. Reading

Joshua Reading concentrates his practice on health information technology, business transactions and tax/tax exemption, with a focus on helping clients in the negotiation and acquisition of a variety of technology and services products. He also assists clients with matters concerning foundations and support organizations, governance consulting, physician alignment and physician group practices. Joshua graduated magna cum laude from Indiana University Maurer School of Law and is a member of the Indianapolis Bar Association, the Indiana State Bar Association and the American Health Lawyers Association.

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► For more information about the speakers, you can visit: http://theknowledgegroup.org/event_name/new-telephone-consumer-protection-act-boon-or-bane-to-your-company-live-webcast/

http://theknowledgegroup.org/event_name/new-telephone-consumer-protection-act-boon-or-bane-to-your-company-live-webcast/

The Telephone Consumer Protection Act (TCPA) is a major litigation risk for companies, hospitals, and health care providers who use text messages, artificial or pre-recorded voice messages and other automated dialing technologies to reach customers and patients. Hundreds of class action lawsuits have been filed in recent years seeking damages that amount to millions of dollars in TCPA violations, with the largest TCPA settlement to date reaching upwards of $32 million. New regulations remove key exemptions that previously served as safeguards against TCPA liability. In response, companies need to revise their practices, andhospitals and health care providers need to revise hospital admission forms, to avoid liability and potentially catastrophic penalties under the TCPA.

The Federal Communications Commission (FCC) final regulations requiring prior express written consent for autodialed telemarketing calls to cell phones and pre-recorded telemarketing messages under the TCPA went into effect on October 16, 2013.

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With these latest FCC actions in mind, telecommunication companies, mobile engagement providers, mobile marketers as well as any company that engages in mobile marketing campaigns face considerable challenges in creating and implementing effective TCPA compliance guidelines and TCPA compliant marketing programs.In a two-hour live webcast, the Knowledge Group is assembling a panel of distinguished thought leaders and practitioners to help companies who engage in mobile marketing and various other types of mobile communications understand new compliance guidelines to prevent their businesses from falling into the pitfalls of FCC actions and the extremely costly class action litigation.

Some of the key areas addressed in this webcast:

• TCPA: an Overview of New Regulations• What Calls Are Affected?• What Is an Automatic Telephone Dialing System?• What Is Express Written Consent?• What If There Is an Existing Business Relationship?• Are There Any Exceptions?• What Are the Penalties for Noncompliance?• New Regulations Already in Effect• Compliance and Best Practices• TCPA Litigation Trends and Risks• Up-to-Minute Regulatory Updates

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Featured Speakers:

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Debra R. BernardLitigation Partner, Co-Chair E-Discovery Services & Strategy GroupPerkins Coie LLP

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Jason A. Levine PartnerVinson & Elkins LLP

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Chad R. Fuller PartnerTroutman Sanders LLP

SEGMENT 4:

Lea H. LockhartAttorneyHall, Render, Killian, Heath & Lyman, P.C.

SEGMENT 4:

Joshua P. ReadingAttorneyHall, Render, Killian, Heath & Lyman, P.C.

SEGMENT 2:

Debra R. BernardPartnerPerkins Coie LLP

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Introduction

Jason A. Levine is a litigation partner in the Washington, D.C. office of Vinson & Elkins LLP. A versatile courtroom lawyer

for over 15 years, Jason represents clients in their most important business disputes and has tried 10 complex cases to

juries and the bench. He defends against class actions and serves as lead counsel in cases involving contracts, business

torts, antitrust claims, and e-commerce statutes including the Telephone Consumer Protection Act. A noted authority on

high-tech litigation risks, Jason has been recognized as a Washington, D.C.Super Lawyer, as a "Future Star"

by Benchmark Litigation, and by Lawdragon magazine as among the top 3,000 attorneys in the United States. Jason

received his J.D. in 1994 from Harvard Law School, and his B.A. in 1991 from Brandeis University.

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Corey ParkerSenior ConsultantBaker Tilly Virchow Krause, LLP

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TCPA Litigation: Overview and Dangers

Jason A. LevinePartner

Vinson & Elkins LLPWashington, D.C.(202) 639-6755

[email protected]

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mailto:[email protected]

Perspectives on the TCPA

“The TCPA has become a juggernaut: a destructive force that threatens companies with annihilation for technical violations that cause no actual injury or harm to any consumer”

-- U.S. Chamber Institute for Legal Reform, Oct. 2013

“Because plaintiffs may enforce the statute via class action and because a single advertisement is often faxed to hundreds—if not thousands—of phone numbers, suits under the [TCPA] present lucrative opportunities for plaintiffs’ firms”

-- Reliable Money Order, Inc. v. McKnight Sales Co., Inc. (7th Cir. 2013)

“How to Make A Telemarketer Cry (or, Suing Bozos for Fun & Profit)”

-- http://www.panix.com/~eck/telemarket.html (Oct. 15, 2013)

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Contents

TCPA Primer and Quick Reference Guide Introduction to “Consent” Requirement Top Five Litigation Dangers

Uncapped Statutory Damages and Incentives To Sue Concurrent Federal-State Jurisdiction Vicarious Liability Wrong-Number Liability Insurance Coverage Confusion

Recent Litigation Statistics Speaker Biography

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Basic TCPA Primer

Telephone Consumer Protection Act of 1991, 42 U.S.C. § 227

Creates private right of action to sue for $500 “per violation” for:calls to mobile phones “using any automatic telephone dialing system or an artificial or recorded voice” unless “for emergency purposes,” no commercial purpose, or with “prior express consent of the called party”calls to land lines “using an artificial or prerecorded voice” unless “for emergency purposes,” no commercial purpose, with the “prior express consent of the called party,” or exempted by the FCC faxes comprising an “unsolicited advertisement” unless with the “prior express consent” of the faxed party

States can sue for “patterns or practices” of junk faxing, and the FCC can impose fines of up to $11,000 per violation

Damages can be trebled—to $1,500—per “willful or knowing” violation

Consent is King!

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“Prior Express Written Consent”

As of October 16, 2013, pre-recorded and autodialed calls require “prior express written consent”Requires “an agreement, in writing, bearing the signature of the person called that clearly authorized the seller to deliver or cause to be delivered . . . Advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or pre-recorded voice, and the telephone number to which . . . such . . . Messages [are] to be delivered”The written consent may be obtained electronically

Eliminates the “established business relation” exception

Opt-out mechanism must be announced and available through the call

Likely to spawn additional litigation over consent issues—a gold mine

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Litigation Danger #1: Uncapped Statutory Damages

The TCPA sets no upper bound on damages, unlike statutes like the Fair Debt Collection Practices Act

Simple multiplication:One promotional text message to 100,000 people who previously used phones to order services = class action claim for $50 millionIf sent knowing recipients did not expressly consent = class action claim for $150 million Ten daily messages to same recipients over 10-day period = class action clams for $500 million, possibly trebled to $1.5 billion

TCPA liability has bankrupted companies

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Incentive To Sue and Settle TCPA Suits

Settle for pennies on the dollar? Still costly, and lucrative for plaintiffs’ counsel

Rose v. Bank of America (N.D. Cal.)– 7.7 million calls/texts—exposure over $3.5 billion$32 million total; $8 million fee award

Arthur v. Sallie Mae (W.D. Wash.)–8 million calls—exposure of $4 billion$24.1 million total; $4.8 million fee award

Malta v. Freddie Mac (S.D. Cal.)–5.9 million calls—exposure over $2.9 billion $17 million total; $4.3 million fee award

Ira Holtzman, C.P.A. v. Turza (7th Cir. 2013)Upholding $4,215,000 summary judgment award against solo attorney who faxed occasional newsletters to 200 accountants“Even a recipient who gets the fax on a computer and deletes it without printing suffers some loss; the value of the time necessary to realize that the inbox has been cluttered by junk”

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TCPA “Advisors” and Plaintiffs’ Firms

TCPA litigation is a new cottage industry, now that plaintiffs’ firms have “discovered” the statuteBlogs and websites teach how to induce marketing calls and texts for lawsuits and profitSome explain how to “set up” TCPA lawsuits to maximize damages and negotiate quick settlementsMany law firms recruit class representatives for suits based on a single call, text, or faxTCPA “hotbeds”: S.D. Cal. (Los Angeles), N.D. Cal. (San Francisco), S.D. Fla. (Miami), N.D. Ill. (Chicago)

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Litigation Danger #2: Concurrent Federal-State Jurisdiction

Original intent of TCPA in 1991:Empower consumers to sue for $500 in small claims court, without needing a lawyer Federal courts often refused to exercise jurisdiction over TCPA suits

Class Action Fairness Act of 2005:State-court class actions seeking over $5 million in damages made removable to federal courtLet defendants escape state court TCPA class actions

Mims v. Arrow Financial (U.S. Sup. Ct. 2012):“Federal question” jurisdiction extends to TCPA suitsPlaintiffs can choose state or federal court; defendants can remove state suits to federal court

Concurrent jurisdiction = more courts available for TCPA lawsuits

Breeds litigation over federal/state law control of issues in cases

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Litigation Danger #3: Vicarious Liability

FCC Order, May 9, 2013: federal common law of agency governs TCPA vicarious liabilityProvided “helpful” examples that exceed the law of agencyBeing challenged in court: DISH Network v. FCC (D.C. Cir.)Businesses can be held liable for TCPA violations by agents acting to “benefit” them, even absent specific instructionsMere mention of company’s name in message—even if it did not send or authorize it—suffices for liability if marketer violates TCPAInternal practices and procedures to prevent TCPA violations are irrelevant as to liability based on marketer’s actions

Particular danger for companies that outsource marketing—important to demand and monitor for TCPA compliance

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Litigation Danger #4: Wrong-Number Liability

A prominent federal court of appeals recently decided what happens when a creditor calls the wrong person accidentallyDebt collector called number provided by consenting debtor—but the number had changed handsSeventh Circuit (Easterbrook, J.) held that TCPA requires consent of the called party, not just the intended recipientThe Court advised callers to limit liability by manually dialing first call to verify identify, and using reverse lookup to identify current phone number holder

-- Soppet v. Enhanced Recovery Co., LLC (7th Cir. 2012)

Essentially strict liability for dialing wrong number!

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Litigation Danger #5: Insurance Coverage Unclear

TCPA liability may be covered by “advertising injury” policies or provisions on their face

But insurers have long argued that TCPA damages are fines or penalties, not covered by “advertising injury” provisions

Also, commercial general liability policies typically exclude occurrences arising from distribution of material in violation of a statute

Courts are split over whether TCPA damages are insurableIllinois and Missouri Supreme Courts have ruled that TCPA damages are not punitive and thus are insurableFederal courts in Pennsylvania, South Carolina, and Michigan have upheld coverage denials based on exclusions

Close review of insurance policies is imperative

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Recent TCPA Class-Action Statistics

Class-action statistics from January-June 2013 reveal:

40 TCPA class actions filed—trend is upward88% alleged nationwide classes, not state-specificSplit: texts (37%), faxes (31%), and calls (28%)—all three are vulnerable88% focused on absence of prior consent as primary theory—this will likely increase given the new FCC regulationCases cross diverse industries—only 30% of complaints were filed against marketing, financial service, debt collection, and telecommunication companies combinedOther industries: retail (8%), pharmaceutical (6%), construction (6%), food (6%), health care (2%), automotive (2%), and political (2%)

IT CAN HAPPEN TO YOU!

IF IN DOUBT, CONSULT COUNSEL.

Source: Gajewski & Zetoony, “Managing Legal Risks: Trends in Mobile, Text Message, and Telephone TCPA Class Action Litigation” (Sept. 2013)

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Additional Biography

A versatile trial and appellate lawyer for over 15 years, Jason is a partner in the Washington, D.C. office of Vinson & Elkins LLP., where he represents clients in their most important business litigation. Jason defends against class actions and serves as lead counsel in cases involving contract disputes, fraud, business torts, antitrust, and constitutional claims. Jason has tried 10 substantial jury and non-jury cases and often advises clients on technology-related liability risks, including those posed by the TCPA and by the use of email in business negotiations.

Reflecting the diversity of his business litigation practice, within a recent six-month period Jason tried and won a full defense verdict in a $70 million jury trial over an alleged breach of contract, defeated the U.S. Government’s motion to dismiss his client’s claim in a $250 million civil forfeiture case, and secured full payment of his client’s damages in a complex fraud case.

Jason has been recognized as a Washington, D.C. Super Lawyer (2012-13), as a "Future Star" by Benchmark Litigation (2012-13), and by Lawdragon as one of the top 3,000 attorneys in the U.S. (2008-11) and as one of 500 attorneys “carrying the legal profession to new frontiers“ (2006).

Jason received his J.D. in 1994 from Harvard Law School (cum laude), and his B.A. in 1991 from Brandeis University (summa cum laude, Phi Beta Kappa). He was a judicial law clerk for (now Chief) Judge Randall Rader on the U.S. Court of Appeals for the Federal Circuit from 1994-95.

Contact Jason at (202) 639-6755, or by email at [email protected] 12, 2014

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PROGRAM DISCLAIMER: The content of this presentation is intended for educational and informational purposes only. It does

not constitute the provision of legal advice or services by Vinson & Elkins LLP.

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Introduction

Debra is a seasoned litigator whose practice encompasses the litigation, arbitration and mediation of all types of intellectual

property claims including Lanham Act actions, trademark infringement, trade dress infringement, misappropriation of trade

secrets, copyright infringement, patent infringement, right of publicity as well as general commercial litigation claims. Debra

also has experience in the litigation and arbitration of Telephone Consumer Protection Act (TCPA) class actions and

advises clients on TCPA compliance issues. Additionally, Debra advises clients on litigation readiness and ediscovery

protocols, serves as an active member of the Seventh Circuit E-Discovery Pilot Program Committee and is an adjunct

professor at Chicago-Kent Law School.

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What is an Automatic Telephone Dialing System (“ATDS”)

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The TCPA defines an automatic telephone dialing system to mean “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.” 47 U.S.C. §227(a)(1); 47 C.F.R. 64.1200(f)(2)

Interpretation of ATDS by the FCC

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– An ATDS encompasses hardware that “when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers.” FCC’s June 26, 2003 Report and Order ¶131.

– The “basic function” of an autodialer is the “capacity to dial numbers without human intervention.” FCC’s June 26, 2003 Report and Order ¶132.

– The FCC “has emphasized that this [ATDS] definition covers any equipment that has the specified capacity to generate numbers and dial them without human intervention regardless of whether the numbers called are randomly or sequentially generated or come from calling lists. FCC’s November 26, 2012 Declaratory Order ¶5.

Interpretation of ATDS by the Courts

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Satterfield v. Simon & Schuster, 569 F.3d 946 (9th Cir. 2009) a system need not actually store, produce, or call randomly or sequentially generated

telephone numbers, it need only have the capacity to do it.


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Nelson v. Santander Consumer USA, Inc., 2013 U.S. Dist. LEXIS 40799 (W.D. Wis. Mar. 8, 2013) “Under both the statute and the order, the question is not how the defendant made a particular

call, but whether the system it used had the capacity to make automated calls.” (However, this opinion was vacated by agreement of the parties per settlement).

Dobbin v. Wells Fargo Auto Finance, 2011 WL 2446566 (N.D. Ill. June 14, 2011) Calls manually dialed by desk phones used independently of predictive dialing technology do

not satisfy ATDS definition.


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Griffith v. Consumer Portfolio Serv., Inc., 838 F.Supp.2d 723 (N.D. Ill. 2011) Equipment could be treated as an ATDS if it could be programmed in the future to perform

ATDS functions.


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Hunt v. 21st Mortgage Corp., 2013 WL 5230061 (N.D. Ala. Sept. 17, 2013) “[T]o meet the TCPA definition of an ‘automatic telephone dialing system,’ a system must have a

present capacity at the time the calls were being made, to store or produce and call numbers from a number generator. While a defendant can be liable under §227(b)(1)(A) whenever it has such a system, even if it does not make use of the automatic dialing capability, it cannot be held liable if substantial modification or alteration of the system would be required to reach that capability.”

Gragg v. Orange Cab Co., Inc., 2014 WL 494862 (W.D. Wash. Feb. 7, 2014) The court analyzed whether the Defendant’s system had “a present, not potential capacity to

store, produce, or call randomly or sequentially generated telephone numbers.”

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Pending FCC Petitions on ATDS

Professional Association for Professional Engagement (“PACE”)-October 2013 FCC should define “capacity” as the “current ability to operate or perform an action, when

placing a call, without first being modified or technologically altered.” ACA International-January 2014

FCC should define “capacity” as the present ability

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Youmail, Inc. –April 2013 FCC should clarify that YouMail’s auto-reply system is not an ATDS , that YouMail does not

“initiate” the sending of auto-replies, and that calling parties consent to the receipt of auto-replies.

Glide Talk, Ltd. –October 2013 FCC should confirm that ATDS restriction applies only to equipment that can, at the time of the

call, be used to store or generate sequential or randomized telephone numbers; and software and application providers that enable consumers to choose to send invitational text messages to not “make” calls under the TCPA merely by facilitating the ability of their users to send the text messages.

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Pending FCC Petition on ATDS

GroupMe (Skype)—March 2012 defining "capacity" to encompass only equipment that, at the time of use, could, in fact, have

autodialed random or sequential numbers without human intervention and without first being technologically altered.

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Communication Innovators—June 2012 The Commission should clarify that the definition of an autodialer under the TCPA reflects

equipment that has a present capacity, such as having the current ability to generate and dial random or sequential numbers without additional modifications to the equipment.

The Commission should not interpret capacity as encompassing any conceivable hardware or software modification to a device that would permit it to generate, store, and dial numbers randomly or in sequence.

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Importance of Clarifying the term “Capacity”

If the term “capacity” is construed as to include only potential or theoretical capacity—then many ordinary consumer devices such as smartphones and laptop computers would fall within the sweep of the statute--that is because they have the theoretical or potential “capacity” to randomly or sequentially generate numbers and dial them—albeit, with the installation of an appropriate application or software.

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Pending FCC Petitions on Consent

Generally, often attempt to address the difference in consent requirements between landlines and wireless numbers—particularly informational messages.

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GroupMe, Inc. –March 2012 “intermediary consent constitutes ‘prior express consent’ under the TCPA when calls or text

messages are non-commercial, administrative or informational” Glide Talk, Ltd.—October 2013

to the extent that an app provider is considered a "make[ r ]" of a call, the Commission should clarify that the app provider reasonably can rely on any consent to make social communications that the call recipient has provided to the app user.

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1) The consent must be a “signed” writing but the term "signed" includes an electronic or digital form of signature to the extent such form of signature is recognized as a valid signature under applicable federal or state contract laws. Written agreements obtained in compliance with the E-SIGN Act satisfy the requirements, such as agreements obtained via email, website form, text message, telephone keypress, or voice recording;

2) The consent must clearly authorize the seller to deliver or cause to be delivered the marketing message to the telephone number specifically authorized by the signatory;

Regulations Effective October 2013 Regarding Consent

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Regulations Effective October 2013 Regarding Consent

3) The written agreement shall include a clear and conspicuous disclosure informing the person signing that:

By executing the agreement, such person authorizes the seller to deliver or cause to be delivered to the signatory telemarketing calls using an automatic telephone dialing system or an artificial or prerecorded voice; andThe person is not required to sign the agreement (directly or indirectly) or agree to enter into such an agreement as a condition of purchasing any property, goods, or services.

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Cargo Airline Ass’n – August 2012 Consent should not be required for informational package delivery notifications to cell phones.

Retail Industry Leaders Ass’n—Dec. 201 Regulations should not apply to isolated, immediate, one-time responses to consumer-initiated

requests for text offers (“on demand text offers” or “on demand texts”).

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Pending FCC Petitions on Miscellaneous Issues

ccAdvertising and Revolution Messaging—January 2012 Internet-to-phone text messaging

Coalition of Mobile Engagement Providers, Direct Marketing Ass’n—October 2013 Retroactivity of October 2013 regulations

ACA International—January 2014 Clarifying that predictive dialers are not ATDS Prior express consent should be for original customer Safe harbor for wrong numbers dialed

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Compliance Tips for Companies engaging in SMS/text message marketing

Make sure that you only send SMS/text messages to wireless numbers for which you have prior express written permission via for example, website check-box (should not be “pre-checked”), email, or consumer initiated text;

Only send SMS messages during the time allowed by the applicable state statutes, if any; but at least only between the local hours of 8am and 9pm;

Provide clear opportunity for opt outs (e.g. “Stop,” “unsubscribe,” “cancel” “quit”) and information that “Msg & data rates may apply;”

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Compliance Tips

Maintain accessible records of consents; Only employ vendors who can affirmatively demonstrate knowledge of and compliance with the

requirements of the TCPA and have a clear contract that addresses the respective obligations, responsibilities and liability;

Have a policy in place regarding the use of SMS/text message marketing; and Review and otherwise comply with the guidelines set forth in the Mobile Marketing Association’s U.S.

Consumer Best Practices and the CTIA Guidelines

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PROGRAM DISCLAIMER: The content of this presentation is intended for educational and informational purposes only. It does not constitute the provision of legal advice or services by Perkins Coie LLP

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Introduction

Chad is a partner in the financial services litigation practice of Troutman Sanders LLP, where he focuses on the defense of consumer class actions and general business litigation.

Chad has substantial experience defending major consumer class action litigation in cases involving alleged false advertising, product defects, charging for fees and services by a variety of businesses, including computer, software, telecommunications, home warranty, insurance brokerage, and auto finance companies. He is well versed in California’s Unfair Competition Statutes, including Business & Professions Code Section 17200. He has tried cases to verdict before courts and private arbitrators and has substantial experience in mediation.

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Reshma Patel - JacksonManagerBaker Tilly Virchow Krause, LLP

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TCPA Federal Court Private Litigation

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Sept 1-30, 2013 August 1-31, 2013 Sept 1-30, 2012

162 165 75

TCPA suits were up 116% from September 2012 to September 2013

Class Certification Issues Under the TCPA

•TCPA classes may be more difficult to certify and/or settle after:

• Connelly v. Hilton,• Smith v. Microsoft, and• Newman v. AmeriCredit Financial Services, Inc.

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Fed. R. Civ. P. 23 Prerequisites

• Numerosityº So numerous that joinder is impracticable

• Commonalityº Common questions of law or fact

• Typicalityº Claims or defenses are typical

• Fairnessº Representative parties will fairly and adequately protect the interests of the class

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Connelly v. Hilton Grand Vacations Co., LLCNo. 12-cv-599 (S.D. Ca. Oct. 29, 2013).

•Background:• The complaint alleged that subsidiary Hilton Grand Vacations made over 37 million illegal

telemarketing calls to more than six million cell phones over a four-year period, seeking between $18 million and $54 million in statutory damages.

• Connelly moved to certify the class, but Hilton objected, arguing that the proposed class failed to meet the predominance requirements under Civil Procedure Rule 23(b)(3).

• The hotel chain argued that potential class members voluntarily provided their contact information to Hilton in a variety of ways.

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Connelly v. Hilton…

• Holding:• Court held that the class could not be certified because the issue of consent had to be

addressed on an individualized basis.

• Predominanceº Express consent was provided in a variety of factual scenarios.º These forms of interaction with Hilton are relevant to a determination of prior express

consent.

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Connelly v. Hilton…

• Rule 23(b)(2) settlement:• Court held that individualized statutory damages are also ineligible for (b)(2) certification,

regardless of parallel request for injunctive relief.

• Practical Implications:• Companies should offer numerous ways to provide consent in order to reduce the potential for

standardization, which

leads to easier class certification.

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Smith v. MicrosoftNo. 11-cv-1958 (S.D. Ca. Jan. 28, 2014).

• Background: Plaintiff sought certification of a class consisting of all individuals that “received a text message from short code 88202 containing the term ‘Xbox’ on September 12 or September 13, 2008.” º The plaintiff alleged that Microsoft utilized a text-message advertising company to send

approximately 90,000 text messages promoting Microsoft’s Xbox and that he did not consent to receive telemarketing text messages sent on behalf of Microsoft.

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Smith v. Microsoft…

• On January 28, 2014, Court denied the motion to certify the class.• Holding:

• Superiorityº Individual testimony was needed to determine a myriad of facts, including identities of

subscribers and “prior express consent.”• TCPA was never meant for class actions

º Small claims court

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Smith v. Microsoft …

• Venue – Does not make logical sense because class representative is a resident of Illinois and contacts to California are minimal.

• Manageability • Notice• Calculation of individual damages• Distribution of damages

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Smith v. Microsoft …

• Prior Express Consent – Significant evidentiary concerns were present.• Ascertainability – Narrowing class to those customers who actually received the text is difficult.

• Plaintiff only had phone numbers, but did not have which consumer received the text.

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Smith v. Microsoft…

• Practical Implications:

• Oppose Class Certification.

º Constantly explore issues surrounding ascertainability and manageability.

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Newman v. Americredit Financial Services, Inc.No. 11-cv-3041 (S.D. Ca. Feb. 3, 2014).

•Background:• Plaintiffs in two consolidated class actions assert that Defendant used autodialing equipment or

a prerecorded voice message to call consumers.• The calls were allegedly made regardless of whether the individual had a loan account with the

company or not.

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Newman v. AmeriCredit …

• Holding:• Court denied motion for class certification and settlement finding the proposed settlement deal

was confusing, among other reasons.

• Two Classesº Account Holdersº Non-Account Holders

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Newman v. Americredit …

• Typicality• Plaintiff is a member of the second class.

• Fairness• Both classes are compensated the

same regardless of consent.

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• Notice• How to ascertain class and how to provide notice.

• Opt-Outs• Not inclined to approve settlement which makes it unnecessarily burdensome to submit a claim

or opt out.

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• Objections: • Fees and Costs Filed Concurrently with Motion for Final settlement – does not provide class

members opportunity to object to fee motion itself.• Practical Implications:

• Notice is increasingly becoming a problem.• Ascertaining this class was problematic because of the non-account holders.• Limit scope and size of class when

possible.

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TCPA - Recent Circuit RulingDish Network, L.L.C. v. FCC, et al., No. 13-1182 (D.C. Cir. Jan. 22, 2014).

•Holding: D.C. Circuit panel refused Dish Network’s petition to review certain FCC guidance on TCPA. Court held that FCC guidance was not binding on courts.•Practical Impact: Federal agencies can issue influential legal interpretations, including of the TCPA, without accountability or legal challenge in court.

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TCPA - Prior Express ConsentMais v. Gulf Coast Collection Bureau, Inc., 944 F. Supp. 2d 1226 (S.D. Fla. May 8, 2013).

•Holding: Neither creditors nor debt collectors have “prior express consent” to call a cell phone number via an ATDS merely by obtaining a phone number on a credit application. •Practical Impact: Outlier case that runs counter to 2008 TCPA guidance from the FCC.

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TCPA - Prior Express Consent, cont.Baird v. Sabre, Inc., 2014 U.S. Dist. LEXIS 11246 (C.D. Ca. Jan. 28, 2014).

•Holding: Individuals who knowingly release their cell phone numbers (e.g., on credit applications) have, in effect, given their “prior express consent” to be called at that number.•Practical Impact: Baird followed the FCC’s 2008 TCPA Order and hopefully should resolve concerns that Mais would represent a bell-weather of change in the law.

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TCPA - Prior Express Consent, cont.Wills v. Optimum Outcomes, Inc., 2014 U.S. Dist. LEXIS 7377 (D. Utah 2014).

•Holding: Prior express consent is provided when a cellphone number is included in a dispute/cease & desist letter to the creditor.•Practical Impact: Provision of a cell phone number in any document could be considered “prior express consent” under the TCPA.

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TCPA - Good Faith Exception Chyba v. First Fin. Asset Mgmt., 2013 U.S. Dist. LEXIS 165276 (S.D. Cal. Nov. 20, 2013)

•Holding: Where consumer listed cell phone number as “Home” number on rental car application, Defendant had good faith basis to believe that Plaintiff provided “prior express consent.”•Practical Impact: Shakes up the notion that the TCPA is a strict liability statute.

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TCPA - StandingOlney v. Progressive Casualty Ins. Co., 2014 U.S. Dist. LEXIS 9146 (S.D. Ca. Jan. 24, 2014)

•Holding: The party with standing under TCPA is the subscriber of the telephone number, which is both: (1) The “account holder,” and (2) The “regular user” of the phone.•Practical Impact: Provides for a potentially dispositive affirmative defense on standing grounds.

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Conclusion

• TCPA lawsuits are continuing on an upward trend.• Companies need to undertake a complete TCPA compliance audit to prepare for future litigation.• Oppose certification when possible.

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Introduction

Lea Lockhart practices in the area of health care law with a focus on health information technology, general business

transactions and services, privacy and security and electronic health records. Prior to joining Hall Render, Lea graduated

from Saint Louis University School of Law and earned a Master of Health Administration from Saint Louis University

College for Public Health and Social Justice. She completed a fellowship at Saint Louis University Hospital and assisted the

hospital in researching business and transactional matters, such as physician arrangements, hospital and physician liability,

certification and licensure issues and medical staff matters and credentialing. Lea was also a lead editor for the Saint Louis

University Journal of Health Law & Policy and interned at MetroHealth Medical Center in Cleveland, Ohio.

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Introduction

Joshua Reading concentrates his practice on health information technology, business transactions and tax/tax exemption,

with a focus on helping clients in the negotiation and acquisition of a variety of technology and services products. He also

assists clients with matters concerning foundations and support organizations, governance consulting, physician alignment

and physician group practices. Joshua graduated magna cum laude from Indiana University Maurer School of Law and is a

member of the Indianapolis Bar Association, the Indiana State Bar Association and the American Health Lawyers

Association.

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Risks and Best PracticesThe TCPA and Healthcare Providers

TCPA Implications for Healthcare Providers

• Follow-up phone calls to patients• Automated messages as appointment reminders• Phone calls/texts following up on data transmissions• Debt collection purposes• Vicarious liability for third party service providers

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Forms of Communication

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• Text messages (SMS) are considered phone calls and are governed by the TCPA

• Residential lines vs. cell phones

• Artificial and pre-recorded calls (“robo calls”)

• Auto-dialed calls

• Dual-purpose calls

– Chesbro v. Best Buy Stores, L.P.

– Facts and circumstances analysis

Established Business Relationship

• October 16, 2013 regulations removed the “established business relationship” exception

• Many healthcare providers previously relied on this exception– Debt collection companies as agents for healthcare providers

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Consent Requirements

• The October 2013 regulations also clarified that the “prior express consent” requirement means written consent for certain communications

– Healthcare providers must now have consent from patients in writing for covered communications

• For certain communications, only prior express consent is required (e.g., verbal)– Implied consent is not sufficient for this requirement (e.g., patient providing his/her phone

number – Mais case)

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Healthcare Exception

• “Healthcare” messages made by, or on behalf of, a “covered entity” or its “business associate” covered by HIPAA

– For calls to residential phones, no consent required

– For calls to cell phones, written consent is not required, but some prior express consent is still required (e.g., verbal)

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Tax-Exempt Non-Profit Organizations

• Calls/messages made on behalf of a 501(c)(3) entity

– For calls to residential phones, no consent required

– For calls to cell phones, written consent is not required, but some prior express consent is still required (e.g., verbal)

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ID and Opt-Out Requirements

• All artificial and pre-recorded calls that are not healthcare related must:– State at the beginning of the message the entity responsible for the message– During or after the message, state the phone number of the entity responsible for the message

• For artificial and pre-recorded calls delivering a telemarketing message, the call must include an automated opt-out mechanism

– As with the ID requirements, healthcare messages are exempted from this opt-out requirement

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Penalties and Recent Enforcement Actions

• Private right of action– Individuals who receive the calls/messages can sue

• Statutory damages• $500 per call/message• $1,500 per call/message if it was a knowing or willful violation• No cap on class action damages

• Mais v. Gulf Coast Collection Bureau, Inc.– Burden of demonstrating prior express consent rests with party defending the TCPA claim – in

this case a collection agency working for a hospital– Hospital was not found vicariously liable in this case

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CAN-SPAM Act Something to Be Aware Of

• Regulates the automatic sending of commercial emails

• There are exceptions for “transactional” or “relationship” based emails

• Some emails are received by cell phones as SMS and may be covered by the TCPA as well

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Best Practices for Healthcare Providers

• Patient Consent Forms– Include authorization for communications on standard consent form (written consent)– Make sure scope of authorization includes billing and collection services agencies

• When written consent is not available, for healthcare messages, obtain verbal consent while collecting contact information

• Retain consent forms for at least four years (federal statute of limitations for TCPA actions)

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► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type

your question in the box that appears and click send.

► Questions will be answered in the order they are received.

Q&A:

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Debra R. BernardLitigation Partner, Co-Chair E-Discovery Services & Strategy GroupPerkins Coie LLP

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