Litigation & Arbitration – Page 3

Dish Network Ordered to Pay $280 Million Fine, Damages in Federal TCPA Lawsuit

Jun 09 2017

By Joseph C. Wylie II, Molly K. McGinley, Nicole C. Mueller

In a 475-page opinion issued earlier this week, the United States District Court for the Central District of Illinois ordered Dish Network Corp., to pay $280 million to the United States government and four states, marking what the government says is a record fine for telemarketing violations, including violations of the Telephone Consumer Protection Act (“TCPA”), the Telemarketing Sales Rule and the laws of California, Illinois, North Carolina, and Ohio, through what the Court called “millions and millions” of calls.

In March 2009, the states and the Federal Trade Commission (“FTC”) sued Dish Network after the company settled with 46 states for purported violations of “do not call” rules and rules governing robocalling. The Court found that Dish Network and its contractors made millions of illegal calls by calling numbers listed on the national Do Not Call Registry and by placing telemarketing calls that deliver prerecorded messages to live consumers, in violation of the TCPA and the states’ laws governing telemarketing.

Plaintiffs sought damages in the amount of $2.1 billion, but the Court determined that the amount requested, approximately 150 percent of Dish Network’s annual profits, “could materially affect Dish’s ability to continue operations.” Although the Court declined to interpret the TCPA as allowing an award “up to” $500 per violation rather than $500 per violation, as Dish Network requested, the Court exercised its discretion in awarding an amount less than $500 per violation. An award of $500 per violation would have incurred a penalty of $8.1 billion; instead, the Court awarded $280 million, or twenty percent of Dish Network’s 2016 profits, an amount it determined to be “proportionate and reasonable” and “a miniscule fraction of maximum possible penalties and damages.” The Court determined the reduced award to be appropriate given that Dish Network “made some efforts to avoid violations in its direct marketing and took some actions” to monitor third-party contractors while substantial enough to reflect “[t]he injury to consumers, the disregard for the law, and the steadfast refusal to accept responsibility.”

The Court further prohibited the company from violating do-not-call laws moving forward and imposed a 20-year plan for supervision of Dish Network’s telemarketing.

This is the second judgment against Dish Network issued in 2017 for violations of the TCPA (the prior judgment, issued by a federal court in North Carolina, is discussed here and here). As the cases against Dish Network demonstrate, companies may face substantial liability based on the actions of third-party contractors.

Dish Network to Pay $61.5 Million in Damages After TCPA Trial

May 26 2017

By Molly K. McGinley, Joseph C. Wylie II, Lexi D. Bond

This week a federal judge in North Carolina ordered Dish Network LLC (“Dish”) to pay treble damages in the amount of $61.5 million, or $1,200 per call, to class members in a Telephone Consumer Protection Act (“TCPA”) action against Dish, Krakauer v. Dish Network L.L.C., Case No. 1:14-cv-00333, as a result of marketing efforts made by Dish’s contractor, Satellite Systems Network (“SSN”). Under the TCPA, treble damages are available in the court’s discretion for violations that occur “willfully or knowingly.” Since the court found that Dish “willfully and knowingly” violated the TCPA, Dish was ordered to pay three times the $20.5 million jury verdict (calculated at a rate of $400 per call) against Dish (previously discussed here).

Federal Government Not Successful in Moving to Dismiss First Amendment Challenge to TCPA

Mar 27 2017

By Andrew C. Glass, Gregory N. Blase, Christopher J. Valente, and Michael R. Creta

A North Carolina federal district court recently denied a motion by the federal government to dismiss claims raising a First Amendment challenge to a portion of the Telephone Consumer Protection Act (“TCPA”). See American Ass’n of Political Consultants v. Lynch, Case No. 5:16-00252-D (E.D.N.C.). At this early stage of the case, the government did not address the substance of the constitutional challenge. Rather, the government asserted that the court did not have jurisdiction over the case and that the political organizations which filed the suit did not have standing to maintain suit. The court, however, rejected the government’s arguments and allowed the case to proceed.

Background

Last year, a bi-partisan coalition of political groups filed a two-count complaint alleging that aspects of the TCPA run afoul of First Amendment free-speech protections. Specifically, the suit contends that the TCPA’s prohibition on making auto-dialed calls or texts to cell phones without the requisite consent, 47 U.S.C. § 227(b)(1)(A)(iii), imposes a content-based restriction on speech that fails to pass strict scrutiny and is unconstitutionally underinclusive. The federal government moved to dismiss on standing and subject-matter jurisdiction grounds. In response, the plaintiffs amended their complaint to add the Federal Communications Commission (“FCC”) as a defendant and to address purported deficiencies in the original complaint.

Proposed Fairness in Class Action Litigation Act of 2017 Seeks to Curb Attorney Abuses of Class Action Device and Expand Class Action Defendant Protections

Mar 02 2017

By Brian M. Forbes, Joseph C. Wylie II, Molly K. McGinley, Jennifer Janeira Nagle, and Matthew N. Lowe

On February 9, 2017, Rep. Robert Goodlatte (R-Va.), the Chairman of the House Judiciary Committee, introduced the Fairness in Class Action Litigation Act of 2017 (the “Act” or “H.R. 985”). The Act significantly expands the class action reforms proposed in an earlier version of the bill that stalled after passage in the U.S. House of Representatives and imposes significant new restrictions on class action lawyers and plaintiffs seeking to proceed under Rule 23 of the Federal Rules of Civil Procedure, as well as implementing new rules applicable to cases consolidated through the multidistrict litigation process. The stated purposes of the Act are to: (1) “assure fair and prompt recoveries for class members and multidistrict litigation plaintiffs with legitimate claims;” (2) “diminish abuses in class action and mass tort litigation that are undermining the integrity of the U.S. legal system;” and (3) “restore the intent of the framers of the United States Constitution by ensuring Federal court consideration of interstate controversies of national importance consistent with diversity jurisdiction principles.” In a press release, Rep. Goodlatte announced that the objective of the proposed legislation is to “keep baseless class action suits away from innocent parties, while still keeping the doors to justice open for parties with real and legitimate claims, and maximizing their recoveries.”

To read the full alert on K&L Gates HUB, click here.

Your Money Is No Good Here: U.S. Supreme Court Holds That an Unaccepted Rule 68 Offer of Complete Relief Does Not Moot an Individual’s Claims, but Questions Remain

Jan 22 2016

By Andrew C. Glass, Gregory N. Blase, Jennifer J. Nagle, Jeremy M. McLaughlin, and Matthew Lowe

On January 20, 2016, the United States Supreme Court issued its decision in Campbell-Ewald Company v. Gomez regarding Rule 68 offers of judgment.[1] The Court held that a defendant cannot moot a case by merely offering complete relief to a plaintiff but left unanswered whether a defendant may do so by actually providing complete relief. Nor did the Court reach the question of whether a plaintiff can continue to seek to represent a putative class when his or her individual claims are mooted before a class is certified.

Read More

Sixth Circuit Finds No TCPA Liability For Debt Collection Calls Made To Phone Number Provided After Inception of Credit Relationship

Sep 03 2015

By Joseph C. Wylie and Molly K. McGinley

In Hill v. Homeward Residential, Inc., the Sixth Circuit recently held that a plaintiff could not recover under the Telephone Consumer Protection Act for autodialed calls made to a wireless phone number that the plaintiff provided to the creditor. In so holding, the Court clarified that a consumer is deemed to have provided express consent to be contacted regarding a debt, so long as the consumer provides his or her wireless phone number “in connection with a debt he owes,” even if the phone number is not provided at the time the debt is created or the credit relationship is initiated.

The plaintiff in Hill obtained a mortgage but did not provide his cell phone number to the mortgage provider when the mortgage was first entered into. After his mortgage was sold, he voluntarily provided his cell phone number to the new mortgage company on a number of occasions, both orally and in writing. The successor mortgage provider proceeded to contact him at that number on hundreds of occasions, many of which involved use of a device that the plaintiff contended was an automated telephone dialing system under the TCPA.

The trial court denied summary judgment and allowed the case to proceed to trial on two disputed issues of material fact: whether the device in question was an ATDS, and whether the plaintiff had consented to be called via ATDS on his cell phone. The jury returned a general verdict in the defendant’s favor, and the plaintiff appealed.

Court Awards Individual Plaintiff $229,500 in Damages Under TCPA

Jul 12 2015

By Marty Stern, Joseph C. Wylie II, Molly K. McGinley and Nicole C. Mueller

A recent decision by a New York federal court serves as a stark reminder of the need for companies to adopt and follow robust “do not call” procedures in order to minimize the risk of rapidly escalating statutory damages under the Telephone Consumer Protection Act. The case appears to be the first to rely on the Federal Communications Commission’s recently-announced but at the time, unreleased TCPA declaratory rulings (previously discussed here). (The order has just been released, but as of this writing, the link was down.)

Sixth Circuit Limits Scope of “Unsolicited Advertisement” under the TCPA

Jun 24 2015

By Joseph C. Wylie II, Molly K. McGinley, and Nicole C. Mueller

The Sixth Circuit recently held that a facsimile which lacks commercial components on its face does not constitute an advertisement under the Telephone Consumer Protection Act and ruled that the possibility of remote economic benefit to a defendant is “legally irrelevant” to determining whether the fax violates the TCPA. The Sixth Circuit’s narrow rule stands out among decisions from other courts that have adopted an expansive interpretation of “advertisement” under the TCPA, and demonstrates that the scope of the TCPA is indeed subject to limitations. Read More

Supreme Court Grants Cert. to Consider Whether Offer of Complete Relief Moots TCPA Class Action

May 22 2015

By Andrew C. Glass, Joseph C. Wylie II, Gregory N. Blase, Jennifer J. Nagle, Eric W. Lee

The United States Supreme Court recently granted certiorari in a Telephone Consumer Protection Act class action challenging text messages which a U.S. Navy vendor sent to recruit new sailors. In Campbell-Ewald Company v. Gomez, No. 14-857, the Supreme Court will review (1) whether a defendant’s offer to provide complete relief as to individual claims deprives the plaintiff of Article III standing, and (2) whether such an offer can also prevent a putative class plaintiff from proceeding where no class has yet been certified.

In Campbell-Ewald, the plaintiff brought suit under the TCPA for himself and a putative class of individuals who the plaintiff claimed had not provided consent to receive a recruiting text message from the Navy. Before the plaintiff moved for class certification, the defendant made a Rule 68 “offer of judgment” offering the plaintiff complete monetary and non-monetary relief. When the plaintiff rejected the offer, the defendant moved to dismiss on the basis that its offer of complete relief mooted both the plaintiff’s individual and class claims under Article III.

The district court denied the motion to dismiss. On appeal, the Ninth Circuit agreed with that aspect of the district court’s ruling. The Supreme Court’s review should resolve a split among the circuits as to the effect of a Rule 68 offer in the class action context. A decision, however, is not likely until June 2016. Our recent client alert by Irene C. Freidel and Jennifer J. Nagle, To Offer or Not to Offer: Post Genesis, Uncertainty Continues Regarding the Impact of Rule 68 Offers of Judgment in the Class Action Context, provides additional discussion of Rule 68 and offers of judgment in class actions, more generally.

Campbell-Ewald is the second case in which the Supreme Court recently granted cert., which could have potential impacts on TCPA class action litigation. In addition, in Spokeo, Inc. v. Robins, No. 13-1339, which will also be heard next term, the Supreme Court will consider whether a plaintiff must have suffered actual harm in order to have standing to sue for statutory damages under the Fair Credit Reporting Act. That statute, like the TCPA, appears to permit recovery of statutory damages upon the showing of a violation, and the federal circuit courts of appeal are currently split over whether a plaintiff may state a claim for statutory damages without separately showing injury-in-fact as a necessary prerequisite for standing. The Supreme Court’s resolution of this issue in the FCRA context may have significant implications for class action and individual litigation under a wide range of federal statutes, including the TCPA. For more information on the Spokeo case, please see our recent post in K&L Gates Consumer Financial Services Watch blog.

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