March 28, 2016
Class Action Alert
Defining the borders of telemarketing: a federal district court’s recent holding that a realty company’s automated text messages did not constitute telemarketing under the Telephone Consumer Protection Act (“TCPA”) provides further guidance for businesses looking to minimize liability under the Act.
Businesses should revisit the meaning of “telemarketing” for purposes of compliance with the Telephone Consumer Protection Act (“TCPA”) in light of a federal district court’s recent holding that a realty company’s automated text messages did not constitute telemarketing under the Act. In Payton v. Kale Realty, the District Court for the Northern District of Illinois held that Kale Realty’s text messages, which were sent by a third-party communication company, did not constitute telemarketing as defined by the TCPA because the messages were designed to solicit the hiring of employees or independent contractors, as opposed to the selling of goods or services.
The text messages in dispute stated as follows:
“Kale Realty named 2013 Top 100 Places to Work by Tribune—We pay 100% on sales—Reply or visit http://joinkale.com to learn more! Reply 68 to unsubscribe.”
The TCPA was enacted in 1991 to address the growing number of telemarketing calls to increasingly frustrated consumers. Since its enactment, the TCPA has required a caller to have the prior express consent of a consumer before making a call using an autodialer or that delivers a prerecorded message. In 2003, the Federal Communications Commission (“FCC”) expanded the TCPA’s reach by ruling that text messages were also considered “calls” under the Act. 18 F.C.C. Rcd. 14014 (2003). TCPA litigation at that time focused on the prior express consent requirement. Then, in 2012, the FCC revised the TCPA consent rules to require prior express written consent from the consumer in the case of autodialed telemarketing calls to cell phones. That is, if the call or text message constitutes telemarketing, then the prior consent standard is heightened: the caller must not only have the consumer’s express consent, but that consent must be in a writing conforming to specific requirements set by the FCC. Specifically, in addition to containing the consumer’s telephone number, the writing must bear the signature of the person to be called, and “clearly authorize” the caller to deliver “advertisements or telemarking messages using an automatic telephone dialing system or an artificial or prerecorded voice.” 47 C.F.R. § 64.1200(f)(8). These additional requirements for establishing prior express written consent make the distinction of whether a call or text is considered telemarketing or not very important. The determination of whether a call or text constitutes telemarketing can be a dispositive factor in many TCPA cases.
The district court’s decision in Kale Realty provides further guidance on the meaning of the term “telemarketing” and is an important decision for companies looking to minimize liability under the TCPA. One of the primary issues in Kale Realty was whether Payton, one of the plaintiffs, had consented to text messages and autodialed calls from Kale when he included his cellphone number in the signature box of multiple e-mails to Kale discussing the possibility of merging Payton’s business with Kale’s. To answer this question, the court first had to decide whether Kale’s text message constituted telemarketing, which would in turn determine the level of prior consent required: the lower bar of prior express consent or the more stringent prior express written consent.
The TCPA’s implementing regulations define telemarketing as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person.” 47 C.F.R. § 64.1200(f)(12). As the court noted in Kale Realty, the telemarketing inquiry, that is, whether the call was made to encourage the purchase or investment in goods or services, focuses on the purpose of the call or message, rather than its content. That said, the purpose of a message can be inferred from the content and context of the message. Courts have held that where the implication of a telemarketing purpose is clear from the context of the message, the TCPA does not even require that the message explicitly mention goods, products or services.
In this case, the district court held that the purpose of Kale’s message, “was not to encourage an individual to purchase any of Kale’s services but rather to inform plaintiffs about an opportunity to become an independent contractor for Kale.” The text message, therefore, was soliciting employment and did not constitute telemarketing as defined by the TCPA. Because Kale’s text was not telemarketing, the more lenient prior express consent standard applied. Moreover, because the text message offering Payton the opportunity to enter into an independent contractor relationship was related to the original reason for which Payton voluntarily disclosed his cellphone number (i.e., business discussions related to a possible merger), the text message (even though sent two years later) did not exceed the scope of the original consent. As such, Kale had Payton’s prior express consent to send the non-telemarketing text message and did not violate the TCPA. The court accordingly granted summary judgment in Kale’s favor.
Kale Realty is important in several respects. First, it reiterates that, not just the content, but the purpose behind calls and text messages can have significant legal ramifications in the context of a TCPA suit. It also shows that courts will carefully examine whether a call can be considered telemarketing. In this case, even though the texts were promotional and designed for the purpose of financially benefiting the company that sent them, they were not deemed telemarketing because they were not designed to sell a product or service. This is encouraging news for businesses that would like to promote themselves using modern technology. It also shows that consent, once acquired, does not necessarily expire with the passage of time absent an explicit revocation of consent.
Notwithstanding these encouraging developments, businesses that utilize autodialers and text messaging must remain vigilant. This district court ruling is not binding on other courts. Moreover, even to the extent the ruling becomes more broadly adopted, businesses must bear in mind that consent is an affirmative defense under the TCPA—meaning it is the defendant’s burden to prove. Accordingly, it is always the best practice to obtain consent in a signed writing before initiating calls and messages and, regardless of the purpose and content of the message, it is always best to obtain consent that specifically allows for the receipt of autodialed calls, prerecorded calls and text messages at the specific phone number designated by the consenting party. The TCPA and the FCC’s rules are complex and not entirely intuitive. Any business contemplating a mass marketing campaign utilizing automated calling technologies or text messaging should always consult with counsel first.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.