Second Circuit Ruling Opens Door To Telephone Consumer Protection Act Class Actions In New York

Litigation under the Telephone Consumer Protection Act (TCPA) has skyrocketed in recent years, with an estimated eighty percent of all cases filed in or transferred to federal court under the statute occurring in the past five years.1 Because of the availability of statutory penalties, these cases often proceed as class actions, aggregating thousands of claims at once. A recent decision from the Second Circuit will likely increase the trend. On December 3, 2013, the United States Court of Appeals for the Second Circuit ruled that class actions under the TCPA can be brought in New York federal court, a reversal from earlier Second Circuit precedent.

Background

The Telephone Consumer Protection Act ("TCPA") was passed in 1991 to protect consumers from aggressive telemarketers.2 Among other things, the statute prohibits the use of an auto dialer or an artificial or pre-recorded voice to make a non-emergency call without the prior express consent of the called party to a cellular phone or other similar device or service.3 A more burdensome "prior express written consent" requirement applies if the call is a sales call, or if it consists of an artificial or pre-recorded sales message to a residential line. Under the statute, "call" includes the sending of a text message.4

The statute further prohibits the transmission of unsolicited advertisements to fax machines, unless there is an established relationship with the recipient, the fax number was voluntarily provided or obtained from a public source, and the fax contains a compliant opt-out notice.5 A company who violates the Act's provisions is liable for statutory damages of $500.006 and up to $1,500.00 for violations found to be willful and knowing.7

Bank v. Independence Energy Group LLC et al.

On March 19, 2012, Todd C. Bank ("Plaintiff") filed a putative class action against defendants Independence Energy Group and Independence Energy Alliance LLC ("Defendants").8 The complaint alleged that, in January 2012, Defendants called Plaintiff's residential telephone line using an artificial or pre-recorded line that delivered a message advertising Defendants' electricity-related services.9 The complaint further alleged that Defendants placed at least 10,000 similar calls during the four years preceding the lawsuit.10 The complaint sought statutory damages on behalf of all individuals to whose residential telephone lines Defendants placed one or more telephone calls in violation of the TCPA.11...