On September 19, 2024, Judge Lorna G. Schofield, District Judge for the United States District Court for the Southern District of New York, issued an informative TCPA consent-related decision in Watson v. Manhattan Luxury Vehicles, Inc. Plaintiffs sued Manhattan Luxury Vehicles (“Defendant”) for allegedly violating the Automatic Telephone Dialing System (“ATDS”) and Do Not Call (“DNC”) provisions of the Telephone Consumer Protection Act (“TCPA”). The TCPA was signed into law in 1991 to restrict certain telephone calls delivered to United States consumers. As our readers may recall, the National Do Not Call registry was enacted by the federal government under the authority granted to it by the TCPA. Generally, companies are prohibited from placing certain telemarketing calls to consumers who have: 1) registered their telephone numbers on the National Do Not Call list; and 2) not otherwise provided TCPA consent.
In Watson, Defendant filed a Motion for Summary Judgment (“Motion”), arguing that Plaintiffs’ claims should be dismissed in their entirety. Regarding Plaintiffs’ ATDS claim, Defendant argued that it did not utilize an ATDS in connection with the calls at issue. With regard to Plaintiffs’ DNC claims, Defendant argued that: 1) lead Plaintiff did not sign up for the National DNC registry; 2) even if he did, he provided TCPA consent for receipt of the subject communications; and 3) he and Defendant had an established business relationship. The Court granted Defendant’s Motion as it pertained to Plaintiffs’ ATDS claim, but denied the Motion as it pertained to Plaintiffs’ DNC claims. In the course of doing so, the Court made abundantly clear that TCPA consent cannot be transferred.
Key Requirements and Exceptions to the Do Not Call Compliance Provisions
If a consumer’s telephone number is registered on the National DNC registry, unless an exception applies, telemarketing companies are generally prohibited from contacting the consumer absent consent to do so. Among other exceptions, the penalty provisions do not apply to telemarketers who have an established business relationship with the consumer. A company has an established business relationship with a consumer if: (a) the consumer has entered into a transaction with the seller within the previous 18 months, or (b) the consumer inquired about the seller’s goods/services within the previous three months.
Under the TCPA, telemarketers are liable for statutory damages in the amount of $500 per call. If a court of law finds that a TCPA violation was willful, it may award the call recipient up to $1,500 per call. Note that telemarketers can also be fined up to $43,792 per violation of the DNC provisions of the Telemarketing Sales Rule (“TSR”).
Why is Watson Important to Your Business?
In partially denying the Motion, the Court determined that Plaintiffs’ TCPA consent to the receipt of telemarketing communications could not be transferred to Defendant. By way of background, Defendant acquired part of its customer list from Honda of Manhattan (“HOM”), a motor vehicle dealership that closed in 2017. Customers of HOM had previously provided TCPA consent to receive telemarking communications from HOM. Defendant argued that because Plaintiffs had previously provided consent to receive telemarketing communications from HOM and other related parties, it was not liable for violations of the DNC provisions of the TCPA.
The Court held that TCPA consent must be “clearly and unmistakably granted,” and “the consumer must understand that by providing a [telephone] number, he or she is agreeing to receive [telephone] advertisements.” Furthermore, “[t]his consent can grant permission both to a party and to its affiliates or other non-parties, if the consent makes clear who is granted permission.” After a fact-intensive analysis, the Court decided that no reasonable jury could find that the Plaintiffs’ consent extended beyond HOM to Defendant simply because it purchased the HOM customer list. Because Plaintiffs’ class has now been certified, even at the statutory minimum of $500 per violation, Defendant faces an enormous potential monetary judgment.
Against this backdrop, companies that engage in telemarketing must maintain proper telemarketing compliance procedures. Telemarketers should subscribe for access to the National DNC registry, pay all necessary fees, and scrub potential called party numbers against the list unless they otherwise have consent to call or an established relationship with the called party.
The attorneys at Klein Moynihan Turco regularly advise clients on DNC compliance and defend TCPA class action matters.
If you require assistance with telemarketing law compliance or related litigation defense, please email us at info@kleinmoynihan.com or call us at (212) 246-0900.
The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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