Court Strikes Non-Forum Class Members’ Claims in TCPA Class Action under <i>Bristol-Myers Squibb</i>We have been closely watching how courts have applied the Supreme Court’s Bristol-Myers Squibb decision in the class action context, and the early results are mixed. But the Northern District of Illinois made a big step in the right direction when it decided America’s Health and Resource Center, Ltd. v. Promologics, Inc. The court granted the defendants’ motion to strike the class allegations because (among other things) the court lacked personal jurisdiction over non-Illinois members of the alleged class.

Promologics is a TCPA case involving alleged junk faxes. While the case’s discussion is not clear on where the allegedly improper faxes originated, they did not come from Illinois. Instead, they were sent to recipients both inside and outside of Illinois.

In response to the defendants’ B-MS jurisdictional objection, the plaintiffs argued that B-MS does not apply to class actions, and in the alternative, that defendants’ challenge was untimely.

The court dealt swiftly and decisively with the threshold question applying Bristol-Myers Squibb to class actions. Grabbing hold of the Supreme Court’s statement that “due process requires ‘a connection between the forum and the specific claims at issue,’” the court expressed its “belief that Bristol-Myers Squibb applies in equal measure to class actions.” It also quoted the Eastern District of New York’s pithy line from In re Dental Supplies Antitrust Litigation: “The Constitutional requirements of due process do[ ] not wax and wane when the complaint is individual or on behalf of a class.”

The court had little trouble applying B-MS to this class action, but wrestled more with the question of timeliness—and the defendants almost certainly experienced a range of emotions as they read the court’s opinion. As we all know from Civil Procedure 101, defendants must raise personal jurisdiction challenges in their first responsive pleading or else the objection is waived.  The Promologics defendants did not do so because Bristol-Myers Squibb had not then been decided. After that opinion came down, they argued that it changed the law enough to justify giving them a chance to raise it. The court disagreed. It concluded that B-MS merely clarified the law about personal jurisdiction, but did not so fundamentally change the law as to excuse the defendants’ failure to raise a timely objection. “Without an intervening change in the law and without an earlier, controlling authority blockading such efforts, Defendants’ failure to mount a timely challenge to personal jurisdiction constitutes forfeiture of that challenge.”

At this point, things look pretty bleak, but the court “excuse[d] the forfeiture” on its own initiative by noting that courts have the independent power to apply the proper governing law.  Thus, regardless of who raised what issues when, the court found that Bristol-Myers Squibb was the controlling law, and applied it accordingly.

This case helps defendants in three important ways:

First, particularly while we wait for the first appellate court to weigh in on the issue, the more district courts that apply B-MS to class actions the better. Appellate courts will certainly do more than count district court opinions when they decide whether to apply B-MS in the class context, but they will still count cases. And in the task of persuading the first appellate court or another district court, every good case makes the string cite longer and adds another helpful quote to the arsenal available to defendants.

Second, though the passage of time means that fewer pre-B-MS cases are percolating through the system, the court’s willingness to apply B-MS in the face of a finding of forfeiture reminds companies that they may be able to press this argument even if their early case pleadings did not raise it.

Third, note carefully that the court found that B-MS did not radically change the law, a view that defendants should adopt. Instead of treating B-MS as a landmark case, consider that it merely follows on and clarifies personal jurisdiction law going all the way back to International Shoe. Relying on the case in this way puts defendants on the strongest footing to defeat the argument that B-MS does not apply in class actions. There is no special rule for specific personal jurisdiction in class actions or mass actions—there is just one rule for all cases. That is the true rule of B-MS.

Irrevocable Consent Comes to the Eleventh Circuit: Two District Courts Apply Reyes to Boot TCPA CasesA critical question in Telephone Consumer Protection Act (TCPA) cases is whether the plaintiff gave consent to receive communications from the defendant, and whether that consent had been revoked by the time of the communication. Given the problems with the TCPA in general, you would probably not be surprised to learn that the TCPA does not specify how a person can revoke consent. The TCPA lawsuit industry wants a world where a person can give formal consent to receive communications and then revoke it on a whim. This “anything goes” revocation standard can expose companies to sudden and sizable liability.

Thankfully, the Second Circuit held in Reyes v. Lincoln Automotive Financial Services that a person who gives consent as part of a bargained-for exchange cannot unilaterally revoke it. Where a consumer consented as part of the consideration for the contract, the company can continue to rely on that consent.

Irrevocable consent under Reyes is anathema to TCPA cases because most companies are––or soon will be––including appropriate consent language in their agreements with their customers.

The big question facing companies now is whether Reyes will expand beyond the Second Circuit. While some early trends were bad, we are happy to report that two district courts in the Eleventh Circuit have relied on Reyes to grant summary judgment in TCPA cases.

The first of these two cases is Few v. Receivable Performance Management, in which the Northern District of Alabama granted summary judgment in a single-plaintiff case. In Ms. Few contract with her satellite TV provider, she agreed that the provider and any debt collector acting on the provider’s behalf could contact Ms. Few at a particular phone number. A debt collector then called Ms. Few to recover an alleged debt, and Ms. Few said that she did not wish to receive calls. The debt collector nevertheless called or texted more than 180 times.

No dice, ruled the district court. In the absence of controlling Eleventh Circuit precedent, the court found Reyes persuasive and applied the bargained-for exchange rule: “because she offered that consent as part of a bargained-for exchange and not merely gratuitously, she was unable to unilaterally revoke that consent.”

The Middle District of Florida––a notoriously dangerous TCPA jurisdiction for defendants––reached a similar result in Medley v. Dish Network, LLC. The plaintiff, Ms. Medley, complained that her lawyer had effectively revoked her consent to be contacted by Dish, which responded with a Reyes argument. The court agreed with Dish, and cited the Northern District of Alabama’s Few case with approval. It also helpfully distinguished several cases that had permitted unilateral consent revocation.

These cases are good news for companies facing TCPA liability in the Eleventh Circuit. While the appeals court has recognized federal common law governs issues of giving and revoking consent, it has not yet addressed Reyes and the effect of a bargained-for exchange. It is hoped that Few and Medley will lead a trend toward further adoption of Reyes.

The takeaway in litigation is to press the Reyes issue. Some courts have reached unfavorable conclusions when addressing consent and revocation in the abstract, but courts have been more receptive to defendants that can point to the particular inequity of a plaintiff getting the benefits of consent in a contract and then repudiating the contract to obtain a TCPA windfall.

Specific to the class-action context, the adoption of Reyes affords multiple chances to defeat class claims. Early summary judgment practice on consent and revocation can put putative class representatives on the defensive, and potentially complicate plaintiff’s efforts to show adequacy, commonality and typicality. Putative class representatives may also have to resort to individualized facts to show why they should be allowed to back out of the deal that included their consent, potentially putting plaintiffs on the horns of a dilemma: Save the class and risk losing the whole case, or save the case and risk losing the class-action payday.

We’ll close with a practical point: Companies should be studying their consumer-facing agreements to determine whether a consumer’s consent to receive telephone communications is––or can be reconfigured to be––part of a bargained-for exchange. Companies can help manage their TCPA liability by crafting their customer agreements appropriately as to arbitration (including a non-severable class action waiver), indemnity, and the bargained-for nature of consent. These preventive measures, deployed effectively, can both dissuade the prowling packs of TCPA lawyers from bringing a claim in the first place, and also strengthen the company’s defense if litigation is filed.

Reality Wins: Sixth Circuit Affirms Companies Must Send Fax to Be “Sender” under TCPATo be liable for a junk fax Telephone Consumer Protection Act (TCPA) violation, does a company have to actually send a fax? The plain language of the TCPA says yes: “It shall be unlawful for any person… to use any telephone facsimile machine, computer, or other device to send…an unsolicited advertisement[.]” The verbs are “use” and “send,” so the plain language of the TCPA limits liability to the person or company actually sending the fax. Some courts, however, have added a gloss on the statute and expanded liability to persons who use agents to send unsolicited advertisements. The Sixth Circuit recently took up a case that would have expanded TCPA liability much further. Thankfully, the court refused to depart from the language of the TCPA by holding that a company cannot be liable for a junk fax that it neither sent nor caused to be sent.

In Health One Medical Center, Eastpointe P.L.L.C. v. Mohawk, Inc., the plaintiffs alleged that Mohawk Medical, a pharmaceutical wholesaler, sent unsolicited junk faxes advertising its prices for products manufactured by various pharmaceutical companies. After Mohawk failed to answer the complaint, the plaintiff amended to add the two pharmaceutical companies as defendants, arguing that these companies were “senders” of the junk faxes because somebody else sent a fax advertising the companies’ products. While the companies presumably could have indirectly benefitted from increased sales from the faxes, they neither asked for nor authorized the faxes. Relying on some broadly written FCC regulations, the plaintiff asked the court to deem the pharmaceutical companies the senders because their goods or services were being advertised.

The Sixth Circuit was having none of it: “[T]o send a fax in violation of [the TCPA],” it held, “one must ‘use’ a fax machine or other device to convey or dispatch an unsolicited advertisement to another fax machine.” Because the pharmaceutical companies “neither dispatched the faxes nor caused them to be sent,” they could not be liable. With satisfying punchiness, it labeled the plaintiff’s theory as “some legal alchemy” and declared the pharmaceutical companies “innocent.”

The court also signaled that it might, on different facts, be willing to roll back the FCC regulations on which the plaintiff relied: “the use of a fax machine or other device, and the sender’s own responsibility for the conveyance or dispatch… are [requirements] that the agency must enforce, not elide.” Whether other litigants will accept this invitation to attack the FCC regulations is an issue to watch.

Health One joins a line of recent cases that refuse to impose TCPA liability where the allegation is that companies ratified or benefitted from illegal calls, faxes, or texts made by an agent See, e.g., Hodgin v. UTC Fire & Security Americas Corp., 885 F.3d 243 (4th Cir. 2018); Kristensen v. Credit Payment Servs., Inc., 879 F.3d 1010 (9th Cir. 2018); Jones v. Royal Admin. Servs., Inc., 887 F.3d 443 (9th Cir. 2018). However, unlike Health One, these other three cases were decided after discovery and depended on specific facts showing the degree of control or benefit received by the putative principal. Companies would be prudent to review their marketing contracts to make sure that they are requiring TCPA compliance in their agreements (including indemnification provisions, if possible), and clearly delineating that third-party marketing companies are not acting as agents.

Notably, the Sixth Circuit opened its opinion with a telling quip: “Some questions seem to arise only in class-action lawsuits.”  The TCPA, in all of its ineffective obsolescence, is a favorite of the class-action plaintiffs’ bar, which has had success using it to certify classes of uninjured plaintiffs and reap large fee awards. TCPA class-action filings are up, but—if this author’s experience is any guide––so are spam calls and texts and faxes. The ground has shifted beneath the TCPA, which Congress passed in 1991, and  no apparent benefits outweigh its draconian punishments. Congress should fix it or replace it.