Gibbons Law Alert

Gibbons Law Alert

Author: Michael R. McDonald

District of New Jersey Further Clarifies TCPA’s Reach For Text-Marketing Campaigns

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Posted in Class Action Defense

On April 2, 2020

In a recent decision, Chief Judge Freda L. Wolfson of the District of New Jersey further clarified the reach of the Telephone Consumer Protection Act (TCPA) as it relates to certain text marketing campaigns by businesses. In Eisenband v. Pine Belt Automotive d/b/a Pine Belt Nissan, Eisenband filed a putative class action lawsuit against an automotive dealership, Pine Belt, claiming that Pine Belt had violated the TCPA by using an Automated Telephone Dialing System (ATDS), otherwise known as an autodialer, to send a text message to his cell phone. Eisenband had telephoned Pine Belt in 2017 requesting information about the cost of leasing a specific vehicle and instructed Pine Belt to call him back on his cell phone with the requested pricing information. Pine Belt’s sales representative obtained the cost estimate data and returned the call, as requested, but Eisenband decided not to enter into a lease for the vehicle. A few days later, Pine Belt sent Eisenband a promotional text message concerning lease options on other vehicles, which prompted him, about one week later, to file a class action lawsuit seeking statutory damages of up to $1,500 per text message, for himself and for every person in the putative class who received such text messages. Discovery revealed that Pine Belt had sent the text...

Guidance for Consumer Product Manufacturers, Distributors, and Sellers

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Posted in Class Action Defense

On March 25, 2020

Wide-ranging issues are arising in the aftermath of the COVID-19 crisis and will continue to impact our clients in a growing number of ways. The Gibbons Consumer Class Action Defense Team is here to help and can work with you to address these critical concerns. Communication with consumers is critically important for consumer product manufacturers, distributors, and sellers, whether in the form of product labeling, advertising, or direct communications through telephone, text, and email. These communications are fraught with class action hazards that should be addressed in advance. Particularly in our present environment, product statements or advertising that, for example, promote the ability to stave off infection, increase the body’s immune system functions, or disinfect surfaces, may become subject to challenge in class action lawsuits by entrepreneurial class action attorneys. Sellers that contact their customers using text messaging platforms or dialing systems need to be particularly wary given the proliferation of TCPA class actions which cause great harm to small and large business alike. Also, companies seeking to recoup losses may over-aggressively promote their own products in a manner that is illegal and anti-competitive. Franchisors and franchisees may be faced with economic circumstances that make their current arrangements impractical. If you have any questions or would like more information about potential class actions in connection...

Supreme Court Further Restricts Class Arbitration Finding It Must be Unambiguously Authorized

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Posted in Class Action Defense

On May 9, 2019

In a 5-4 decision authored by Chief Justice Roberts, joined by Justices Thomas, Alito, Gorsuch, and Kavanaugh, the U.S. Supreme Court in Lamps Plus Inc. v. Varella held that courts may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide basis. Lamps Plus Inc. v. Varella involved an employee who had filed a class action against his employer. Lamps Plus responded by seeking to compel arbitration on an individual rather than a classwide basis. The district court dismissed the case and compelled arbitration, but on a class basis. Lamps Plus appealed, and the Ninth Circuit upheld the district court’s decision. The Ninth Circuit’s reasoning hinged on the fact that the arbitration agreement was ambiguous about the availability of class arbitration. The Ninth Circuit thus distinguished Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662 (2010), arguing that in Stolt-Nielsen the parties had stipulated that the agreement was silent about class arbitration, whereas the parties had no such stipulation in Lamps Plus. Because the Ninth Circuit held that the agreement was ambiguous, the appellate court turned to California’s contra proferentem rule and held that this state law contract principle required the court to interpret the ambiguous language against the drafter—here, Lamps Plus. The Supreme Court reversed because the principle...

Accepting the Risks of Arbitration Clauses: The Southern District of New York Upholds Arbitrator’s Decision Allowing Class-Wide Arbitration

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Posted in Class Action Defense

On January 28, 2019

On January 2, 2019, the Southern District of New York (SDNY) in Wells Fargo Advisors LLC v. Tucker, declined to vacate an arbitrator’s clause construction award, which construed the parties’ arbitration agreement as permitting class-wide arbitration. Importantly, prior decisions from the SDNY and Second Circuit concluded the parties’ arbitration agreement clearly and unmistakably expressed the parties’ intent that an arbitrator should decide the gateway issue of whether the agreement permitted class arbitration. Having delegated that authority to the arbitrator, the District Court found no basis in law to overturn that clause construction award. The two prior decisions in this matter, addressing the issue of who should decide whether an agreement permits class arbitration, align well with the United States Supreme Court’s January 9, 2019 holding in Henry Schein, Inc. v. Archer & White Sales, Inc. There—resolving a circuit split—the High Court held that when the parties’ contract delegates the arbitrability question to an arbitrator, a court may not override the contract, and possesses no power to decide the arbitrability issue, even if the court believes the argument that the arbitration agreement applies to a particular dispute is “wholly groundless.” The clause construction award in Wells Fargo Advisors LLC arose out of a claim by Wells Fargo financial advisors that Wells Fargo, through policy, did not...

Ninth Circuit Adopts Expansive Definition of Autodialer Under the TCPA, Creating Circuit Split With Third Circuit

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Posted in Class Action Defense

On September 24, 2018

In Marks v. Crunch San Diego, the Ninth Circuit Court of Appeals, considering anew the statutory definition of automatic telephone dialing system (ATDS) under the Telephone Consumer Protection Act (TCPA), held that an ATDS includes a device that stores telephone numbers to be called, “whether or not those numbers have been generated by a random or sequential number generator.” The Ninth Circuit expressly declined to follow the Third Circuit’s interpretation of ATDS in Dominguez v. Yahoo, Inc., thus setting up a clear Circuit split. Both Marks and Dominguez were issued after the D.C. Circuit invalidated the FCC’s interpretation of ATDS in ACA International v. Federal Communications Commission. In Marks, plaintiff brought a TCPA class action after receiving three text messages from Crunch Fitness where he had a gym membership, asserting that the texts were sent using an ATDS. The messaging system was a “web-based marketing platform designed to send promotional text messages to a list of stored telephone numbers.” Phone numbers were either manually entered into the system or provided directly by customers. To send text campaigns, a Crunch employee would log in, select the intended recipients, generate the content of a message, and select the time and date for the transmittal of the text messages. The district court granted summary judgment on the ground...

New Jersey Appellate Division Affirms Dismissal of Four Putative Class Actions Claiming Violations of Section 16 of the TCCWNA

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Posted in Class Action Defense

On August 9, 2018

In Duke v. All American Ford, the New Jersey Appellate Division affirmed dismissal of four putative class actions (consolidated for appeal) alleging that agreements to purchase, lease, or rent motor vehicles violated the Truth in Consumer Contracts, Warranty, and Notice Act’s (TCCWNA) Section 16. The trial courts had dismissed all such claims for failure to plead a violation of Section 16. While the appeals in these matters were pending, the Supreme Court issued its decision in Spade v. Select Comfort, holding that “an adverse consequence is a necessary element of the TCCWNA cause of action.” As a result of the Supreme Court’s decision in Spade, the Appellate Division in Duke rejected the appeals and affirmed the orders of dismissal without even considering the various substantive Section 16 arguments. Each of the putative class action complaints alleged that certain clauses in purchase, lease, or rental documents violated Section 16 of the TCCWNA, which, among other things, prohibits language in a written contract “that any of its provisions is or may be void, unenforceable, or inapplicable in some jurisdictions without specifying which provisions are or are not void, unenforceable or inapplicable within the State of New Jersey.” Three of the cases (Duke, Barbarino, and Greenberg), involved contracts for the lease or purchase of vehicles, which contained a...

In Defective Shingles Class Action, Third Circuit Rejects Novel “Expected Useful Life” Defect Theory Premised on Warranty Period

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Posted in Class Action Defense

On June 8, 2018

The Third Circuit recently confirmed that plaintiffs must provide evidence of a specific defect, capable of classwide proof, in order to prevail on proposed class claims, holding that, where defective design is “an essential element of Plaintiffs’ misrepresentation-based claims,” whether proof of the defect “is susceptible to classwide evidence is dispositive of whether Plaintiffs can satisfy predominance” under Rule 23(b)(3). In Gonzalez v. Owens Corning, the plaintiffs sued the manufacturer of Oakridge fiberglass roofing shingles, claiming that their shingles, which were subject to warranties of 25 years or more, were “plagued by design flaws that result in cracking, curling and degranulation” and “will eventually fail.” The plaintiffs argued that the product warranties amounted to representations about the shingles’ expected useful life. Plaintiffs did not dispute that the design specifications for all shingles met the applicable industry design standard (“ASTM”), but claimed that compliance with the ASTM specifications did not consistently yield shingles that would last the stated warranty period. Thus, plaintiffs claimed that the issue of “defectiveness should be judged by the expected useful life of the shingles as represented by the applicable warranty period.” The plaintiffs’ expert, whose testimony was largely stricken as unreliable under Daubert, acknowledged that there was no single set of measurements applicable to all shingles that would constitute a design...

New Jersey Supreme Court’s “Aggrieved Consumer” Ruling Will Erode TCCWNA Class Actions

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Posted in Class Action Defense

On April 19, 2018

The New Jersey Supreme Court’s April 16, 2018 decision in Spade v. Select Comfort (consolidated with Wenger v. Bob’s Discount Furniture, LLC), entirely destroys the viability of “no injury” class actions under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”) and will also surely erode the viability of TCCWNA class certification more broadly. Via referred questions from the Third Circuit Court of Appeals, the N.J. Supreme Court held that in order to be an “aggrieved consumer” under the TCCWNA, a plaintiff must demonstrate an adverse consequence caused by an unlawful provision in a consumer contract or other writing. The TCCWNA essentially prohibits businesses from including in any written consumer contract, warranty, or sign any provision that “violates any clearly established legal right of a consumer or responsibility of a seller” or other business. N.J.S.A. § 56:12-15. Although the TCCWNA on its face appears to only allow an “aggrieved consumer” to sue to recover a “civil penalty” of not less than $100 or actual damages, this Statute has been used—some might say abused—with increasing frequency by the plaintiff class action bar to bring “no injury” class actions premised solely upon the existence of a contract containing some unenforceable or illegal provision. Naturally, tens or hundreds of thousands of uniform consumer contracts with allegedly offending...

TCPA Update: When Revocation of Consent Is Unreasonable

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Posted in Class Action Defense

On April 11, 2018

The District of New Jersey recently made clear that when attempting to cancel unwanted commercial text messages, if the recipient does not follow the sender’s simple instructions, any other attempts to revoke consent to the text messages may be found unreasonable. In Rando v. Edible Arrangements International, LLC, a class action lawsuit claiming violations of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, et seq., plaintiff claimed that she was sent commercial text messages from defendant using an automatic telephone dialing system (“ATDS”). Though plaintiff had originally consented to receive such text messages, and never followed defendant’s instruction to text “STOP to cancel,” the complaint alleged that plaintiff had revoked her consent to receive the messages via other return text messages of varying content and that defendant had impermissibly designated an exclusive means for the revocation of consent.” The Rando court held that the complaint failed to state a TCPA claim by failing to allege that the plaintiff’s chosen method of revoking consent was reasonable. Plaintiff had replied to the text with language which would clearly indicate to a human being that she wanted to revoke her consent, but she did not text back “STOP” as instructed in the original text itself. Although District Court Judge Simandle found that the FCC’s statements on...

D.C. Circuit’s Rejection of FCC’s 2015 “Autodialer” Definition is Welcome News for Businesses in TCPA Class Actions

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Posted in Class Action Defense

On March 23, 2018

On March 16, 2018, the D.C. Circuit Court of Appeals issued a long awaited decision in its review of the Federal Communications Commission’s (FCC) 2015 Declaratory Ruling and Order, which among other things, had sought to clarify various aspects of the Telephone Consumer Protection Act’s (TCPA) general bar against using automated dialing devices (ATDS) to make uninvited calls or texts messages. The FCC’s 2015 Order was largely viewed by businesses as having greatly expanded the scope of the TCPA, opening the floodgates of class action litigation against businesses utilizing virtually any type of text messaging to communicate ads to customers. In ACA International v. FCC, the D.C. Circuit, among other things, struck down the Commission’s broad definition of autodialer. The TCPA generally makes it unlawful to call a cell phone using an ATDS, i.e., “equipment which has the capacity-(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” Id. § 227(a)(1). The FCC’s 2015 Order declined to define a device’s “capacity” in a manner confined to its “present capacity,” but rather, construed a device’s “capacity” to encompass its “potential functionalities” with modifications such as software changes. Thus, under the Commission’s 2015 interpretation, calls or texts made with a device having the capacity...

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