Gibbons Law Alert

Gibbons Law Alert

Category: Class Action Defense

Following Duguid, South Carolina District Court Limits Reach of TCPA’s Autodialer Definition

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Posted in Class Action Defense / Privacy Class Actions

On July 8, 2021

In April 2021, the U.S. Supreme Court resolved a circuit split interpreting the Telephone Consumer Protection Act’s (TCPA) definition of “automatic telephone dialing system” or (ATDS). In Facebook, Inc. v. Duguid, the Court held that the clause “using a random or sequential number generator” in the statutory definition of ATDS, 47 U.S.C. § 227(a)(1), modifies both “store” and “produce,” thereby “specifying how the equipment must either ‘store’ or ‘produce’ telephone numbers.” Accordingly, “a necessary feature of an autodialer under § 227(a)(1)(A) is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called.” Duguid thus reversed the Ninth Circuit’s interpretation that the clause “using a random or sequential number generator” modifies only “produce,” such that a device could be an autodialer if it has the capacity to store and automatically dial numbers, even if the numbers are not generated by a random or sequential number generator. Under Duguid, equipment that makes calls to “targeted…numbers linked to specific accounts” are excluded from liability under the TCPA. In June, the U.S. District Court for the District of South Carolina had the opportunity to apply the Supreme Court’s decision. In Timms v. USAA Federal Savings Bank, the plaintiff sought to recover damages from the defendant for alleged violations of the Fair...

Consumer Fraud Class Action Dismissed With Prejudice: Law Enforcement Tows Are Not Covered by the New Jersey Predatory Towing Prevention Act

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Posted in Class Action Defense

On June 21, 2021

On June 14, 2021, Judge Thomas J. Walsh of the Superior Court of New Jersey put an end to the long-running putative class action lawsuit in Kiley v. Tumino’s Towing, which sought to exploit regulations promulgated under the Predatory Towing Prevention Act (PTPA) by the Director of the Division of Consumer Affairs (DCA). The action was removed to federal court under the Class Action Fairness Act, where the magistrate judge initially denied a motion to remand and permitted jurisdictional discovery, but the district court judge later remanded back to state court. Finally addressing the merits, the Superior Court granted the defendants’ motion to dismiss the complaint, with prejudice, agreeing with Tumino’s Towing that the PTPA was not applicable to the towing services requested by law enforcement and performed in accordance with a duly-authorized municipal ordinance. As such, the plaintiff’s sole remaining cause of action for alleged violation of the Consumer Fraud Act (CFA) could not stand. In Kiley, the complaint alleged that the plaintiff’s vehicle was towed by Tumino’s Towing, at the request of the Ridgefield Park Police Department, because his vehicle was illegally parked during a snow emergency. After paying his parking ticket at police headquarters, the plaintiff was given a vehicle release authorization, which he brought to Tumino’s Towing to obtain the release...

Class Action Dismissal Highlights Limits to the “Picking Off” Exception to Mootness

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Posted in Class Action Defense

On May 12, 2021

The District of New Jersey recently dismissed a putative class action lawsuit against Capital One Bank, finding the plaintiff’s recovery during the suit of the full amount of damages sought mooted her claim. The would-be class representative, plaintiff Ellen Fensterer, sued Capital One Bank to recover funds used to purchase British Airways flight tickets. After COVID-19 imposed travel restrictions and caused the flights to be canceled, Fensterer sought recovery of $4,906.31 in expended funds and rewards points. Neither British Airways nor Capital One Bank provided Fensterer’s requested refund, causing Fensterer to file a putative class action against Capital One Bank—and not British Airways—for recovery of the funds. Then, during the pendency of the lawsuit, British Airways issued the full refund sought by Fensterer, and Capital One Bank processed that refund and credited Fensterer’s account. Because a non-party ultimately provided the exact remedy sought, the District of New Jersey applied the general rule of mootness, rather than the “picking off” exception, and accordingly dismissed Fensterer’s claim. The “picking off” exception prevents the loophole that would otherwise allow Capital One Bank (or any defendant) to simply buy off the named plaintiff’s claims before class certification, thereby preventing class certification indefinitely, causing piecemeal litigation, and undermining the purpose of class action litigation generally. But that did not happen...

District Courts Now Split on Whether Provision in TCPA is Unconstitutional

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Posted in Class Action Defense

On May 11, 2021

Earlier this year, we wrote about Lindenbaum v. Realgy, a decision from the U.S. District Court for the Northern District of Ohio, which dismissed the plaintiff’s “robocall” class action under the Telephone Consumer Protection Act (TCPA), based on the Supreme Court’s 2020 holding that a statutory exception for automated calls to collect government debts was unconstitutional. Because 47 U.S.C. § 227(b)(1)(A)(iii) was unconstitutional at the time of the alleged violations, the district court determined that it lacked subject matter jurisdiction and dismissed the lawsuit. Lindenbaum is currently on appeal before the Sixth Circuit (No. 20-4252). On March 18, 2021, the ACLU joined the fight by filing an amicus brief in support of the defendant, arguing that the defendant cannot be held “liable under a discriminatory statutory scheme that punishes only disfavored speakers.” Since Lindenbaum, the Middle District of Florida, in Hussain v. Sullivan Buick-Cadillac-GMC Truck, Inc., also held that this provision in the TCPA is unconstitutional. Similar to Lindenbaum, the plaintiff in Hussain alleged that she received pre-recorded phone calls and voicemails from the defendants without her consent. The defendants sought dismissal of the plaintiff’s complaint, alleging that the TCPA was unconstitutional and unenforceable during the time the phone calls were made, due to the unconstitutional provision. The Middle District of Florida, relying on Lindenbaum...

Third Circuit Affirms That CFA and PLA Claims Can Coexist Independently

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Posted in Class Action Defense

On March 4, 2021

We recently blogged about a New Jersey Supreme Court decision in which the court held that claims under New Jersey’s Consumer Fraud Act (CFA) may be brought in the same action as claims under the Products Liability Act (PLA). In a follow-up to that case, the Third Circuit in Sun Chemical Corporation v. Fike Corporation and Suppression Systems, Inc. applied the New Jersey Supreme Court’s guidance on the interplay between the CFA and PLA. The Third Circuit affirmed in part and reversed in part a District Court judgment, finding that some of the claims were “absorbed by the PLA” and some could be brought independently pursuant to the CFA. Sun sued defendant Fike under the CFA for alleged misrepresentations related to Sun’s purchase of an explosion-suppression system. Sun alleged that Fike “misrepresented various aspects of the suppression system in its pre-purchase conversations” and that Fike was therefore liable for injuries and property damages suffered by Sun from an explosion that occurred at Sun’s facility. The District Court of New Jersey determined that Sun’s CFA claims were precluded and absorbed by the PLA because “Sun was seeking damages because various features of the suppression system failed and that failure caused personal injury to Sun’s employees.” The CFA, the District Court reasoned, could not be used to...

FCC Reverses Course and Finds That Government Contractors Are “Persons” Under the TCPA

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Posted in Class Action Defense

On January 26, 2021

Last month, the Federal Communications Commission (FCC) issued an Order on Reconsideration, overturning Commission precedent by clarifying that federal, state, and local government contractors are “persons” under the Telephone Consumer Protection Act (TCPA) and therefore must, under 47 U.S.C. § 227(b)(1)(A)-(D), obtain prior written consent to make certain calls using an automatic telephone dialing system or artificial or prerecorded voice; to initiate a call to any residential telephone line using an artificial or prerecorded voice; to use a fax machine or other device to send an unsolicited advertisement; or to use an automatic telephone dialing system in such a way that two or more telephone lines of a multi-line business are engaged simultaneously. This ruling is the latest in the Commission’s efforts to protect consumers from unwanted robocalls. The TCPA prohibits certain unsolicited calls made by any “person,” which includes an “individual, partnership, association, joint-stock company, trust, or corporation,” without the prior written consent of the consumer. In 2016, the FCC issued a declaratory ruling stating that the federal government and federal government contractors were not “persons” under the TCPA, and therefore, the limitations on calling enumerated in Section 227(b)(1)(A)-(D) did not apply to them. The FCC reasoned that there is a longstanding presumption that the word “person” does not include the sovereign and that,...

Lack of Plaintiff Article III Standing Proves Fatal to Eleventh Circuit in FACTA Class Action Settlement

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Posted in Class Action Defense

On January 25, 2021

In a 7-to-3 en banc decision, the Eleventh Circuit vacated a high-stakes $6.3 million class settlement on standing grounds. In James Price v. Godiva Chocolatier, Inc., et al, the court held that a named plaintiff lacked standing to bring a claim under the Fair and Accurate Credit Transactions Act (FACTA) on behalf of a proposed settlement class. The plaintiff, Dr. David Muransky, filed a class action complaint against Godiva claiming a violation of FACTA, which prohibits “merchants from printing more than the last five digits of the card number (or the card’s expiration date) on receipts offered to customers.” After visiting a Godiva retail store in Florida, the plaintiff was handed a receipt that contained the first six and the last four digits of his credit card number–a technical violation of FACTA. The plaintiff claimed that the violation was “statutory in nature” and did “not intend[] to request any recovery for personal injury.” The plaintiff further framed the class’s harm from violations as “irreparable harm as a result of the defendant’s unlawful and wrongful conduct,” and that “Plaintiff and members of the class continue to be exposed to an elevated risk of identity theft.” The putative class was so large that Godiva could have faced statutory damages, punitive damages, and costs of more than $342...

Second District Court to Dismiss Claims Based on Unconstitutional Statute Provision

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Posted in Class Action Defense

On January 22, 2021

In Lindenbaum v. Realgy, the United States District Court for the Northern District of Ohio dismissed the plaintiff’s “robo-call” class action under the Telephone Consumer Protection Act (TCPA), based on the Supreme Court’s 2020 holding that a statutory exception for automated calls to collect government debts was unconstitutional. Because the statute was unconstitutional at the time of the alleged violations, the district court determined that it lacked subject matter jurisdiction and dismissed the lawsuit. Originally enacted in 1991, the TCPA restricts almost all prerecorded sales calls to cell phones. In 2015, Congress amended the provision to allow prerecorded calls “made solely to collect a debt owed to or guaranteed by the United States.” 47 U.S.C. § 227(b)(1)(A)(iii). The 2015 provision was struck down in 2020 by the United States Supreme Court’s plurality decision in Barr v. American Association of Political Consultants, Inc. While the Supreme Court struck down the portion of the statute dealing with calls for government debt, it left the rest intact. In Lindenbaum, the plaintiff brought a class action lawsuit alleging violations of the TCPA. Specifically, the plaintiff alleged that she received two prerecorded calls, one to her cellphone and one to her landline, and had not provided express written consent to receive these calls. The plaintiff argued that the severance of the...

Federal Preemption of ‘Structure/Function’ Claims on Dietary Supplements

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Posted in Class Action Defense

On December 14, 2020

Congress amended the Federal Food, Drug, and Cosmetic Act (FDCA) with the Nutrition Labeling and Education Act (NLEA) in 1990 and, in 1994, with the Dietary Supplement Health and Education Act (DSHEA), which provided the Food and Drug Administration (FDA) with regulatory authority over dietary supplements and specifically established “standards with respect to dietary supplements.” Together, the NLEA and DSHEA established “a new category of food products—specifically, dietary supplements—that have unique safety, labeling, manufacturing, and other related standards.” Kroessler v. CVS Health Corp., 977 F.3d 803, 808 (9th Cir. 2020). With Congress finding consumers “should be empowered to make choices” about potential benefits of dietary supplements, DSHEA implemented major shifts in dietary supplement regulation, including exempting “dietary supplements” from FDA drug approval and FDA food additive approval, 21 U.S.C. §321(g)(1), and expressly permitting dietary supplement labels to make “structure/function claims.” 21 U.S.C. §343(r)(6)(A). By definition, a structure/function claim “describes the role of a nutrient or dietary ingredient intended to affect the structure or function in humans [or] characterizes the documented mechanism by which a nutrient or dietary ingredient acts to maintain such structure or function.” Id. at §343(r)(6). Federal law allows such label claims, provided: (1) the manufacturer “has substantiation that such statement is truthful and not misleading”; (2) the label contains a prominent disclaimer that the statement...

Sixth Circuit Holds Faxes Seeking Recipient’s Information Are a Pretext to Advertisement and Thus Within the Purview of the TCPA

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Posted in Class Action Defense

On October 26, 2020

The Sixth Circuit in Matthew N. Fulton, D.D.S., P.C. v. Enclarity, Inc., on remand from the Supreme Court, upheld its previous ruling that faxes seeking the recipient’s information are considered a “pretext” to an advertisement, and thus fall within the scope of the Telephone Consumer Protection Act (TCPA). The June 19, 2020 decision relies upon a 2006 Federal Communications Commission (FCC) Order stating that “any surveys that serve as a pretext to an advertisement are subject to the TCPA’s facsimile advertising rules.” The fax requested that the recipient verify or update its information with Defendant LexisNexis “for clinical summaries, prescription renewals, and other sensitive communications.” Plaintiff’s Complaint alleged that this constituted a pretext to send additional marketing materials to recipients, as well as obtain the recipient’s involvement in Defendant LexisNexis’s database. Plaintiff asserted that Defendants and third parties would use the recipient’s data to send information “regarding products, services, competitions, and promotions,” thereby constituting “a pretext to increase awareness and use of Defendants’ proprietary database service and increase traffic to Defendants’ website.” Defendants moved to dismiss, arguing that the fax did not constitute an advertisement as defined by the TCPA. The Michigan district court dismissed, finding that since the fax did not state that anything was available for purchase or sale, it “lack[ed] the commercial...

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