Putative TCPA Class Action Lawsuit Dismissed for Lack of Jurisdiction

courthouseIn a victory for alleged text message spammers, on August 5, 2013, a Florida Federal Court dismissed a TCPA class action complaint against a marketing company on jurisdictional grounds.  On August 2, 2012, General Electric Capital Corporation (“GE”) was sued in California Federal Court for allegedly violating the Telephone Consumer Protection Act (“TCPA”).  Zoom Tan, Inc., Zoom Tan, LLC, Zoom Tan Franchising, LLC (collectively, “Zoom Tan”) and Club Texting, Inc. d/b/a EZ Texting, Inc. (“Club Texting”), had been sued in the Middle District of Florida for sending the plaintiff, Shaina A. Rutherford, unsolicited text messages.   Club Texting moved to dismiss the complaint for lack of jurisdiction, failure to state a claim, and primary jurisdiction (for referral to the Federal Communications Commission (“FCC”)).

The Court’s TCPA Analysis

Club Texting is a New York corporation with its principal place of business in New Jersey.  It was engaged by codefendant Zoom Tan to market and promote the sale of Zoom Tan’s tanning services.  According to the complaint, this marketing and promotion occurred through the unauthorized transmission of advertisements in the form of text messages sent to the cellular telephones of consumers throughout the country.

Plaintiff alleged that Club Texting submitted to the Florida court’s jurisdiction by engaging in “substantial and non-isolated activity by soliciting and engaging in business” in Florida.  Plaintiff further alleged that Club Texting sent unsolicited spam text messages en masse, earned substantial revenue for same, and engaged in a text message marketing scheme throughout Florida.  In response, Club Texting submitted a sworn affidavit attesting to the fact that it did not intentionally conduct business in Florida and, among other things, did not control the content, timing or direction of the text messages that its customers, like codefendant Zoom Tan, send.  Despite Plaintiff’s allegations that Club Texting sent thousands of unsolicited marketing text messages to Florida consumers on behalf of Zoom Tan, the court was swayed by Club Texting’s arguments and dismissed it from the action. (In dismissing Club Texting on jurisdictional grounds, the court did not consider or reach a decision on Club Texting’s failure to state a claim and primary jurisdiction arguments.)   Zoom Tan remains in the action.

Additional Agency Considerations

In a Declaratory Ruling, the FCC recently held that while a seller (like Zoom Tan) does not generally initiate calls made through a third-party telemarketer (like Club Texting), it nonetheless may be vicariously liable under federal common law agency-related principles for TCPA violations committed by telemarketers that initiate calls to market the seller’s products or services.  The FCC specifically noted that simply because the calls were made to benefit the seller does not automatically create liability on the part of the seller.  There must be something more.

The FCC indicated that “agency” generally is created when it is agreed between the parties that the agent shall act on the principal’s behalf and subject to the principal’s control.  Vicarious liability may arise under this traditional agency model, as well as where the third party agent has apparent (if not actual) authority to act.  (Apparent authority generally means that a reasonable person would understand that an agent has the authority to act on behalf of the principal.)  In addition, a seller (principal) may be liable for the acts of its agent if it ratifies the agent’s acts by knowingly accepting their benefits.

In sum, sellers who do not actually place the calls or send the text messages, as applicable, will only be vicariously liable for third party telemarketer TCPA violations if a common law agency relationship can be demonstrated.

If you are interested in learning more about this topic or need to review your telemarketing practices, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational 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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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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