February 17, 2017
Class Action Alert
Class Action Alert
Recently, the Ninth Circuit held that a gym's promotional text messages sent to a former member constituted a concrete injury, and also explored the issue of what is required to revoke consent, under the TCPA. This alert discusses what consumer-facing businesses need to know.
On January 30, 2017, the U.S. Court of Appeals for the Ninth Circuit held that promotional text messages sent by a gym franchise to a former member constituted a concrete injury, under the Telephone Consumer Protection Act (TCPA), for standing purposes. The ruling provides important guidance on Article III standing following the Supreme Court’s ruling last year in Spokeo, Inc. v. Robbins. While post-Spokeo rulings continue to differ from one case to the next, the Ninth Circuit takes a clear position that the invasion of privacy concerns, underlying the TCPA, mean that nearly any unwanted call, or text, sent in violation of the TCPA can constitute a “concrete” injury conferring standing to sue, even when the plaintiff does not suffer any actual financial harm. But the Ninth Circuit went on to affirm the dismissal of the certified class action because the lead plaintiff had consented to receive the texts, and he had never revoked that consent, even when he cancelled his gym membership.
The plaintiff in Van Patten v. Vertical Fitness Group, LLC, No. 14-55980 (9th Cir.), perhaps in anticipation of beach season, visited a Wisconsin Gold’s Gym franchise in March of 2009. He filled out a visitor card, listed his cell phone number, and then met with the gym’s manager and signed a membership agreement. The agreement contained the cell phone number that the plaintiff had provided. However, like many of us, the plaintiff had second thoughts days later and cancelled his membership during the grace period. He later moved to California.
Three years later, the gym franchise parted ways with Gold’s Gym and went through a rebranding process. The gym owners contracted with a marketing company to announce the gym’s new name (importantly, the actual ownership of the business remained the same). Plaintiff received two texts containing offers to rejoin the rebranded gym at a discount and enter a contest for a prize. Plaintiff declined these offers, and instead filed a class action against the gym and the marketing company. He alleged violations of the TCPA and California consumer protection statutes governing text communications with consumers. The district court ultimately certified the plaintiff’s class, but later granted the defendants’ motion for summary judgment.
The Ninth Circuit affirmed the lower court’s grant of summary judgment, despite the fact that a class had already been approved. But before the Ninth Circuit issued its decision, the Supreme Court of the United States issued the long awaited ruling in Spokeo, underscoring that “Article III standing requires a concrete injury even in the context of a statutory violation,” and that a plaintiff does not “automatically satisf[y] the injury-in-fact requirement” merely because a statute barring any given behavior is violated. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016). While Spokeo reaffirmed the necessity of a showing of “concrete harm” in federal cases, it did not definitively settle the Article III standing confusion in the lower courts. In this case, the Ninth Circuit was still left to decide whether an unsolicited text message, by itself, could constitute a “concrete injury.” The Ninth Circuit agreed with the plaintiff that it could.
Reviewing the history and purpose of the TCPA, the Ninth Circuit first recognized that, “Congress identified unsolicited contact as a concrete harm, and gave consumers a means to redress this harm.” VanPatten. Slip Op. at 10.The court noted that, unlike the alleged harm at issue in Spokeo (the misreporting of innocuous information in violation of the Fair Credit Reporting Act that arguably caused no harm to anyone), unwanted text messages by definition cause at least a minor invasion of privacy. As the court put it, “unsolicited telemarketing phone calls or text messages, by their nature, invade the privacy and disturb the solitude of their recipients.” Such unwanted invasions “present the precise harm and infringe the same privacy interests Congress sought to protect in enacting the TCPA.” Id. at 11. Thus, a plaintiff alleging a violation of the TCPA need not allege any additional harm to have standing to assert his claim. Id.
The court reached a contrary result with regard to the plaintiff’s California claims. Under California’s Unfair Competition Law and/or False Advertising Law, plaintiffs are required to “establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and . . . show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” Id. at 21-22. Thus, a mere intangible invasion of privacy is not sufficient to establish harm under the California statutes. The Ninth Circuit agreed with the district court that the plaintiff had not come forth with any evidence to prove he had suffered any actual economic harm, and therefore the plaintiff lacked standing to bring the state law claims.
The court’s inquiry did not end with standing. Next the court examined whether the defendants could defeat the named plaintiff’s claim with the defense that he had actually given the gym express consent to contact him via text message. Completely negating the plaintiff’s claim, the court held first that the provision of the plaintiff’s phone number when he filled out the membership card constituted “prior express consent” to receive texts from his gym. Adopting the reasoning used by the FCC in 2014, the court acknowledged that while provision of a cell phone number to a business does not constitute permission for that business to contact the customer about any and all topics, “transactional context matters in determining the scope of a consumer’s consent to contact”. Id. at 13. The court held that while providing one’s phone number to a gym in a membership application does not constitute consent to receive texts on any and all topics, it does constitute consent to receive text communications about membership opportunities. Id. at 13.
Next, the court held that since the lead plaintiff never expressly revoked his consent to receive such text messages, the defendants’ invitation to return three years after cancelling his membership was still within permissible bounds, under the TCPA. In reaching this decision, the Ninth Circuit acknowledged that the TCPA is not as clear as many would hope with respect to whether a party may revoke consent to be contacted, and is nearly silent as to what constitutes such revocation. Id. at 19.
Following FCC guidance issued in 2015, the court held that “consumers have a right to revoke consent, using any reasonable method including orally or in writing.” Id. at 19. The court held that the plaintiff, in this instance, did no such thing and rejected the plaintiff’s argument that cancelling the gym membership effectively revoked the gym’s authorization to call or text him at the number he had provided. The court ruled that because the plaintiff “did not clearly express his desire not to receive further text messages, he did not revoke his consent.” Id. at 20. Thus, while other recipients of the gym’s texts might have claims, the lead plaintiff in this case did not, and dismissal of the action was required.
The ruling in this case is significant for two reasons. First, it is one of the first rulings from a court of appeals on an Article III challenge post-Spokeo. It clarifies that an unwanted text solicitation confers standing, regardless of whether or not the recipient sustained a tangible harm, such as a loss of minutes, a higher cell phone bill, or another more individualized showing. This aspect of the ruling is a victory for consumer advocates. Defense attorneys have already complained that the Ninth Circuit’s ruling sets the standing bar too low by establishing a bright line test that will be extraordinarily easy for any TCPA plaintiff to meet.
Nonetheless, consumer-facing businesses can take heart in the second portion of the opinion, focusing on consent and what is required to revoke consent. The court defined a broad scope for what constitutes a consumer’s consent-to-contact. Any message that is sent to the consumer “in connection with” the reason the phone number was originally provided to the business is fair game. Additionally, the dismissal of the plaintiff’s claim underscores that merely leaving a gym, cancelling a library card, or ceasing to be a customer is not enough to put the business on notice that the customer has withdrawn consent-to-contact. Some type of further express communication is required to revoke consent. What constitutes sufficient express communication will remain to be seen as this area of law develops. Bottom line, consumer-facing businesses should carefully monitor any and all avenues by which customers may attempt to revoke consent. Reply texts that simply say “stop”, or verbal pleas to “stop calling me,” may be enough even if the customer does not follow a formalized “opt out” procedure. Indeed, while the TCPA requires that telemarketing calls and texts must provide a mechanism to allow consumers to quickly and easily “opt out” of receiving such calls and texts, the FCC continues to reiterate that consent may be revoked by “any reasonable means.” Moreover, businesses cannot limit the means for revoking consent by contract.
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.