Judge triples reward for plaintiffs in Dish Network TCPA class action

Federal Judge Catherine C. Eagles ruled that the award for members of the Do Not Call Registry who allegedly received telemarketing calls from Dish Network should be increased to $1,200 per call. In January of this year, a jury determined that the amount should be just $400. This means that the potential payout of the class action lawsuit went up from $20 million to $60 million.

The plaintiffs in the case allege that Dish made over 50,000 calls to numbers on the national DNC list in 2010 and 2011. Dish argued that the violations were not willful, as they had instructed their third-party marketers to scrub their call data against the national DNC list. Unfortunately there was evidence that Dish was aware of the violations being committed by their contracted marketers and failed to act on them.

Judge Eagles found that, "...Dish Network willfully and knowingly violated the TCPA and that treble damages are appropriate to deter Dish and to give suitable weight to the seriousness and scope of the violations Dish committed. The Court will treble the jury’s damage award under 47 U.S.C. 227(c)(5) and increase the damages from $400 per call to $1,200 per call."

Read the full order here.

Learn more about Do Not Call compliance, third party telemarketing liability, and telemarketing fines.

Alabama bill would expand telemarketing exemptions for newspaper and magazine sellers

A bill in Alabama has been introduced that would expand the state's telemarketing regulation exemption for businesses that primarily sell newspapers and magazines. "This bill would specify that the inclusion of a gift package or the offering of a magazine as a part of a membership does not preclude the solicitation from being exempt under the law and would further specify that a solicitation on behalf of a magazine would be exempt under the law if the magazine was approved as a magazine for the purpose of accruing income under the Internal Revenue Code." Read the full text of the bill here.
 

New Mexico Data Breach Notification Act

New Mexico has become the 48th state to require businesses to inform their customers when there is reason to believe that their data has been compromised. Businesses that fail to do so could be subject to a fine of up to $150,000. Read the full text of the bill here. Alabama and South Dakota are currently the only states without security breach notification laws.

 

FCC seeking comments on new proposed robocalling rules

The FCC has released a Notice of Proposed Rule Making regarding robocalls. "The Commission proposes...that providers may block calls when the subscriber to a particular telephone number requests that calls originating from that number be blocked; permit providers to block calls originating from invalid numbers; permit providers to block calls originating from valid numbers that are not allocated to a voice service provider; and permit providers to block calls originating from valid numbers that are allocated but not assigned to a subscriber. In addition, the Commission seeks comment on the possibility of permitting providers to block calls in other situations where the calls to be blocked are reasonably likely to be illegal based upon objective criteria." Comments are due on or before July 3, 2017 and reply comments are due on or before July 31, 2017.

FTC's 2016 Advisory Opinion Letter regarding Soundboard Technology to take effect May 19

After being stayed (postponed) only one week by a federal judge, the FTC's November 10, 2016 avatar/soundboard technology letter will take effect on Friday this week.  The policy had originally been scheduled to take effect last week on May 12, but judge Amit Mehta postponed the date by a week to determine if an even longer stay was warranted.  Mehta has ruled against the Soundboard Association's lawsuit challenging the classification of soundboard technology as robocall.  As of Friday, the FTC will not treat soundboard calls differently than more traditional prerecorded robocalls.  While this ruling is disappointing, we believe there are still many viable ways to use such innovative technology.


Recall that avatar or "soundboard" technology uses a combination of live agents and prerecorded snippets.  The live agent listens to one or more calls and plays short snippets prerecorded by American voice talents. This normally results in a live, dynamic conversation between the agent and the call recipient.  Soundboard calls are not illegal, just as other robocalls are not illegal - they are merely subject to certain behavioral rules.  For example, companies can still use soundboard technology to make marketing calls with consent, or non-marketing calls to landlines.  Non-profit entities, such as bona fide charities who are not subject to the TSR, may still use such technology to solicit donations and otherwise. Click the links to learn more about avatar telemarketing law, charitable telemarketing law or robocall law. Political calls are also generally exempt as long as the calls do not become "telemarketing."

Interesting findings from recent FTC case

A recent order out of the Ninth Circuit in an FTC telemarketing case provides some notable new case law. The case involves a magazine subscription seller who allegedly misled customers regarding pricing and other features. The Nevada trial court ruled in the FTC's favor, but only awarded $190,000. On appeal, the Ninth Circuit determined the lower court had not properly calculated the judgment and required the district court to redo the amount.  For the reasons explained below, the total award was then increased to $23 million.  Click here to read the FTC's perspective. Key findings:

Redress as a remedy

The defendant argued that the court lacked authority to order restitution to consumers, but the court held that District Courts have the authority under the FTC Act to "grant any ancillary relief necessary to accomplish complete justice."

Consumer reliance

The defendant also argued that for a court to order redress, there must be proof that each customer relied on the deceptive claims.  The Judge disagreed, finding that "The FTC is entitled to a 'presumption of actual reliance' once it is proven that the defendant made material misrepresentations, that they were widely disseminated, and that consumers purchased the defendant's product."

The legal effect of evidence that some consumers were satisfied

Defendants claimed that some customers were satisfied, and therefore the FTC's entitlement to a presumption of consumer reliance was rebutted. The court rejected that argument, stating, “the fact that some customers were ultimately satisfied with the magazines they purchased does not necessarily mean their original decision to purchase was free from the taint of the defendant's deceptive sales practices."

Calculation of the restitution amount

Although the trial court's original judgement was $190,000, it was based upon an erroneous "net revenue" standard.  On appeal it was held that a two-step burden-shifting framework would be more appropriate for calculating the restitution. This process first requires the FTC to prove the amount it seeks in restitution reasonably approximates the defendant's unjust gains. Then, the appropriate calculation becomes the amount that defendants collected from first-time orders. This two-step analysis ultimately increased the judgement to $24 million. The Ninth Circuit held that the district court applied an incorrect legal standard when it focused on the defendants’ gain rather than the loss to the consumers.