A Post COVID-19 Snapshot of TCPA litigation for Florida

By: Edward A. Maldonado, Esq. May 24, 2020 – Coral Gables, Florida – Categories FCC Practice, The TCPA

Florida TCPA attorneys, start your engines.  As the Florida legal community revs-up their practices after an eight week low-idle, our concerns return to those things we were soldiering before the quarantines shutdowns.  These thoughts however carry an extra layer of uncertainty outside the mere effects of the stand-still.  We’ve just passed through the first part of the “dirty-side” of an economic storm that in has left thousands upon thousands, possibly millions in the final tally, of Floridians and businesses impacted.  The bitter truth is that client who was eight weeks ago, may not be the same today.  Their fights now turned to economic survival, not litigation.

Beyond that, there is the workload.  Active cases previously on a clear path to trial may be now sputtering in the queue as the Florida state courts remain closed until July 5, 2020.  Then there are the backlogs.   New cases, motions, ordinary civil orders jammed the electronic filing systems of the circuit and county court clerks over the quarantine. While these are slowly being cleared now via virtual hearings in an attempt to release the pent-up pressure, the days ahead will be long.   Florida’s federal courts fared somewhat better.  Their electronic filing practice of pleadings continued to churn at normal speed throughout.  But there is a down-shot to the district court’s electronic filing system when coupled with legal remote working – bored attorneys tend to think, write and electronically file more liberally.  This is particularly true when one is holed-up alone.  

So here we sit in our freshly dusted-off law offices and try to figure where to pick things up while planning and hedging the days and months ahead.  Much was happening with and around the TCPA nationally and in Florida when the brakes of COVID-19 were abruptly applied.  How has that changed? How should I adjust?  What can I expect? Daunting questions they are.  Perhaps a little reflection on the before and during periods might give more insight into the after that may or may not come next.

Where we were with TCPA before COVID-19 shut down?  Two diverse issues were trending.

Automated Telephone Dialing Systems.   Immediately before COVID-19 shutdowns, the federal circuits had split over an important element to the TCPA.  What constitutes an ATDS as technology changes and becomes more interactive with users in a virtual environment?  The precise split involved whether virtual web-based CRM and texting platforms, commonly called Platform as a Service (PaaS) environments, fit the ATDS definition of 47 U.S.C § 227(a)(1)(A). This split began here in our own 11th circuit.  This past January the 11th Circuit Federal Court of Appeals ruled that such virtual platforms dependent upon certain human functions, and uploads, did not fit into the statutory language of ATDS as contemplated by the TCPA.  See, Glasser v, Hilton Grand Vacations Co. LLC., 948 F.3d 1301, 1306 (11th Cir. 2020)Glasser involved the Twilio platform web-based platform.  The functionality of the software on the platform requires users to upload pre-compiled lists to be called or texted and holds them only until the transmission is performed.  Results from transmission are returned and held long enough to be downloaded, and then, the entire uploaded file is deleted.  Users control the specific transmission of the calls/texts by a command of SEND.  Prior to that command, users can delete or withhold an uploaded number from being sent from the list.  Substantively, absent the user there is no list, no order of the numbers on the list, no SEND command, and the user holds the control to prevent numbers on the list from being sent before the SEND command is given.  The court’s analysis focused on: 1.) the platform’s inability to store or produce the numbers to be called using a random or sequential generator; and 2.) the degree of human interaction (intervention) required for a call or text to be transmitted from the platform.  The court ruled in line with the platform’s actual functionality (not speculative) and found such characteristics in the actual operation did not fit the statutory definition prescribed by the Federal Communications Act.

Use of an ATDS is an essential element to any TCPA claim, and, this ruling is important to TCPA plaintiffs and defendants alike.  Many small businesses use these virtual platforms for their marketing, sales intake, and text messaging purposes to minimize costs and optimize their limited numbers of employees.   Many plaintiff’s, and their counsel, rely on the appearance of short or long codes in the messages sent and assume an ATDS has been used because it appears automated on the consumer’s telephone handset or device.  However appearance on the consumer’s device is no part of what is prescribed by 47 U.S.C § 227(a)(1)(A) and (B).  The definition goes to equipment prohibited in the stream of telecommunications.  The effect of Glasser thereby puts plaintiffs in an interesting position when claiming a TCPA violation.  Only after a lawsuit is commenced would it be clear that the system actually used was not an ATDS.  Likewise, in any pre-suit discussions, what would be the risk if it was known a platform similar to the virtual one analyzed under Glasser was at issue, but they had a plaintiff had received a coupled of unwanted calls or texts.  Do you move forward or not?  It presents an interesting conundrum for TCPA plaintiffs before they sue.  

Shortly after Glasser, Florida’s federal district courts seemed to be aligning their decisions and analysis including those of Florida’s Middle and Southern Districts.  On other circuits, other federal district courts also began to entertain the Glasser decision either accepting its analysis; or rejecting it lieu of traditional holdings within their circuits that did not dig as deep as Glasser. The circuit split cleaved sharply and effectively teed-up the issue for review by the U.S. Supreme Court, if and when it so chose.  Then the COVID-19 shutdowns stunted further developments.

The TRACED Act.  On another TCPA front, the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act, Pub. L. No. 116-105, 133 Stat. 3274 (2019), (TRACED Act) began the process of implementation by the FCC.  The TRACED Act targets the most egregious TCPA violators whose intent is outright consumer fraud.  However its language has some broad-sweeping implications beyond just that definite purpose.  The TRACED Act places the FCC in the front line of its enforcement and under its Section 3 removes longstanding barriers that the FCC had bemoaned prevented it more aggressive enforcement of robocallers by its Enforcement Bureau.  The FCC welcomed its December 2019 passage with gusto.  The FCC had long been frustrated with its inability to act upon the thousands and thousands of unwanted and fraudulent robocalls/spam texts complaints that had jammed their consumer support center over years.  Their efforts hindered by warning letter (Citation) requirements over non-licensees and other procedural legacies from the 1996 amendment of the Act; by the two year statute of limitations for NAL violations; limits to the fines and forfeitures they imposed; any bite in the enforcement of spoofed calls or masked caller IDs in call transport; and an onslaught of complaints for one-ring international call back scams by foreign scammers that resulted in consumers calling what they thought to be a national number under the North American Numbering system but in fact was an international call changed at a higher rate.     

With the passage of the TRACED Act, the FCC was poised to get aggressive in a unified fashion.  Under the TRACED amended 47 U.S.C. § 227, the FCC’s warning requirement is gone, it may enforce the TCPA against non-licensees, FCC’s statute of limitations is extended to four years, and the FCC is empowered to fine offenders under the TCPA heavier than before (up to $10,000 USD per call).   The TRACED Act also empowered the FCC with the ability to refer for criminal prosecution.  Now, if FCC discovers in any TCPA enforcement action that the repeated robocalls or text violations are believed to have been made with the intent to defraud, cause harm or wrongfully obtain anything of value, then it refer the matter to the U.S. Department of Justice (DOJ) for prosecution.  The TRACED Act mandates three tasks to the FCC: 1.) rules must be established by 2021 requiring all wired and wireless carriers to provide subscribers with robocall-blocking services at no additional line-item charge; 2.) implement a study to ascertain what records a VoIP provider must keep to trace a call to its origin; and 3.) in addition to enforcement under the TCPA the FCC is tasked with enforcement of one-ring international call back scams, either directly or indirectly under the Federal Communications Act.  One additional provision of the TRACED Act that does not grant additional revised power to the FCC, but surely levels the playing field for enforcement, is that all carriers must implement call-authentication technology to ensure that caller-ID information is accurate and correctly identifies the calling party.  The kudos in the TRACED Act goes to FCC Chairman Ajit Pai who had made FCC enforcement of robocalls and texts a top priority on the FCC’s agenda, and Congressional testimony, for several years.  The FCC now has what it wanted to really address robocalls and texts under the TCPA.

Now as FCC practitioners well know, once the FCC obtains more authority under the Act, they don’t ease down – they ratchet up.  This is particularly true when a new law grants them more enforcement powers to fine through forfeitures and make examples of the most egregious offenders.  Unclear from the passage of the TRACED Act was whether FCC implementation would expand and encroach on the space traditionally enjoyed by TCPA private civil class actions or not.  Now here’s the subtle rub with that on a long run impact.  Fines levied by the FCC carry a bigger bite when compared to civil money judgments under 47 U.S.C. §504(a).  These fines are treated as federal debt for collection and bankruptcy discharge purposes. They are enforced by the DOJ, not the FCC, in federal court.  The TRACED Act also positioned the FCC as the forefront of what is civil and what is criminal under its delegated authority under 47 U.S.C. § 227.  This means that efforts against civil violators, a space largely enjoyed solely by private TCPA class actions, will likely be ratcheted-up by the FCC’s Enforcement Bureau to establish benchmark delineations.  These stand to change the TCPA world as we know it.   

Further unclear from the prospective implementation of the TRACED Act is the interplay between the agencies on combined violations of the TCPA, FTC Telemarketing Sales Rule (TSR), and the National Do Not Call Registry.  See, 15 U.S.C. § 6152 and 16 C.F.R. Part 310. Would it be a tag and drag scenario for violators that the FCC deemed as scammers, or would there be a coordinated effort with multiple agency enforcement?  No matter how you look at it, implementation of TRACED Act begs the simple question of whether federal administrative enforcement could eventually overtake the field enjoyed by class action TCPA lawsuits from a practical perspective.  Could the FCC go after an egregious or larger offender already involved in a TCPA civil class action, sack it with fines, and leave only the financial remnants for division to class parties?  The proverbial jury was still out on this when the COVID-19 shut downs came down.

What Happened during quarantine – Look to the trends

So, where do things stand now?  That’s a good question with no succinct answer moving forward.  However at a minimum we can assess what happened with TCPA cases while the virtual hurricane of shutdowns lashed the legal community.  Perhaps some big picture statistics on court case loads is a good place to start.

WebRecon, LLC (www.webrecon.com) provides statistics on TCPA claims nationwide.   Based on these some interesting “big picture” statistics of WebRecon, a snapshot of the impact of COVID-19 shut downs on TCPA cases in the courts can be gleaned and provide insight on how things likely may go from this point forward.   Between January 1st and 31st 2020, plaintiffs filed over 534 new federal TCPA lawsuits nationwide. (WebRecon, Feb. 25, 2020)  By February 2020, another 271 new TCPA filing were added to this total as hints of COVID-19 State stay-at-home quarantines neared. (WebRecon, March 26, 2020)  This equated to a total of 805 new federal TCPA cases for 2020 before March 1st – an increase of +38.8% in new filings in comparison to the same time in 2019. Id. 

In the first week of March, the reality that a national shutdown and stay-at-home quarantine came to realization and fruition.  State and federal courts closed their courthouses, cancelled trials to a future date, and entertained online filings and virtual hearings.  March 1st to 31st 2020 saw an addition of 250 new TCPA plaintiff cases as the courts shut down began. (WebRecon, April 23, 2020)   This brought the nationwide number of new federal TCPA plaintiff case filings to a year to date total of 1055.  March also re-adjusted downward a year to date increase of new TCPA cases compared to 2019 to +23%.  Id.

Drilling into these figures yields a more interesting picture on the present state of TCPA litigation.  Of the 1055 new TCPA cases filed from January 1st to March 31st 2020, a striking 35% of all plaintiffs involved had filed at least one TCPA lawsuit before the new lawsuitId.  Moreover, the lawsuits that alleged punitive class action for the representative plaintiff of those 1055 cases comprised 46%Id.  Combined, these break-outs show that a considerable amount of new TCPA cases hitting the federal court docket seek punitive class action relief, and for one reason or another, are also filed by representative plaintiffs that have litigated before and are savvy as to TCPA violations and their factual predicates.

From April 1st to 30th 2020, the number of new plaintiff TCPA cases hitting the federal courts suddenly jumped by a whopping 650 cases. (WebRecon, May 22, 2020)  Or did it?  This appears to be a false positive result when drilled-down upon. Apparently two TCPA plaintiff firms launched five lawsuits suits around the county against Porch.com with 364 co-plaintiffs comprising this 650 total. Id.  Including all plaintiffs, and co-plaintiffs in the Porch.com lawsuits, this re-adjusted the year to date 2020 new TCPA cases to +46.1% with a 2020 total of new plaintiff cases at 1705. Id. This represents an upward a year to date increase of new TCPA cases compared to same time in 2019 of +111.7%. Id.  However absent the strategy of class set-up in the TCPA claims against Porch.com, the new plaintiff case numbers are more consistent with the prior months’ trend with a total of 286 new plaintiff cases filed.

Even with the Porch.com new case spike in April, the year to date figures of 2020 (inclusive of early COVID-19 quarantines) appear to still be in line with a general trend of TCPA litigation decreasing from its bubble peak in 2016 of 4638 new cases filed nationally compared with a total of 3267 new cases in 2019.  (WebRecon, April 23, 2020)  Unclear from these figures is the ratio of TCPA cases that involve telemarketing robo-calls versus unsolicited receipt of automated text messages, which have reportedly surged in recent years due to an increase use of prepaid cellular mobile phones and quicker number re-assignment practices by wireless carriers.  Regardless, overall statistics available at this time show that TCPA claims generally remain highly litigated even if on a downward trend, and, clearly impacted by the COVID-19 quarantines.

Florida TCPA case break-out statistics for 2019 or 2020 are not readily available.  However, Florida’s Federal Middle District Court in Tampa did rank 4th in the nation as the top courts where new TCPA actions were filed in 2019. (WebRecon, January 28, 2020)  Florida’s Middle District trailed the district courts for Chicago, Atlanta and Brooklyn, New York in 2019 with a total of 41newcases.  Id.  By March of 2020, Florida’s Federal Middle District Court in Tampa dropped to 7th in the nation’s top courts where new TCPA actions were filed with 29 cases. (WebRecon, April 23, 2020).  By April of 2020, Florida’s Federal Middle District Court in Tampa jumped only slightly to 6th nationwide for new filings with a total of 31.  Whether the reduced volume of new plaintiff cases in Florida’s Middle District was attributable to a downward trend in Florida or was purely a result of COVID-19 quarantines is a question that remains to be answered in the next coming months.

TCPA cases in the Florida courts are not generally tracked for any analytic purpose.  However the expansion of new TCPA filings into the Florida state courts is an intriguing question in the wake of Salcedo v. Hanna, 936 F.3d 1162, 1170 (11th Cir. 2019)  and  Cordoba v. DIRECTV, LLC, No. 18-12077, 2019 U.S. App. LEXIS 34146 (11th Cir.  2019).  In both cases,  the 11th Circuit held that a single text message lacks sufficient injury-in-fact standing for cases or controversy under the federal district court’s federal question jurisdiction under U.S. Const. Article II §§ 1-2I  analysis, even if punitive class action relief in generally alleged.  The 11th Circuit also directed plaintiffs with single violation claims to seek relief in the Florida state courts under 47 U.S.C. §227(b)(3), specifically: “A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring [an action] in an appropriate court of that State.”  Florida Circuit Civil courts have concurrent jurisdiction subject to federal law under the Supremacy Clause of the U.S. Constitution and Florida case law under Fla. Const. Art. I § 21.   The Florida courts have also a somewhat developed body of TCPA law under state JunkFax claims filed since the 1991 enactment of the TCPA. 

But a speed-bump may exist for class action TCPA claims based on single violations in the Florida courts.   After January 1, 2020, the jurisdictional amount for cases entertained by the civil circuit court also increased to $30,000 (from $15,000) or more in damages under Fla. Stat, 26.012(2).  Controversies less than that find jurisdiction in the county courts.  Unclear in any statistical review of the TCPA and the Florida courts is whether new TCPA cases are being filed in the circuit civil courts or county courts as an alternative to build a punitive class action case.

Available TCPA case analytics reviewed for this blog did not factor in pre-suit settlements where representative plaintiffs look for quick punitive class settlement from the alleged violator. No verifiable reported national statistics are available for that aspect.  Factoring those types of quick settlements, most Florida TCPA practitioners would agree, the total number of TCPA claims stands to quadruple the number of litigated cases at a minimal.  Post COVID-19 quarantine activity on TCPA demand letters and settlements will be more telling if this ballpark number continues or dramatically declines.  The world has changed since March 1, 2020.  Businesses, particularly small businesses that tend to take quick settlements over costs involved in TCPA litigation, stand to be in considerable financial distress as a result of the Florida non-essential business shutdowns. Settlement payment based on extrapolations of a potential class action exposure damages may be beyond the economic wherewithal of small businesses.  They may see foregoing any negotiation and any defense in court as their best option and they are tracked for federal bankruptcy relief both as businesses and business owners.    Both plaintiffs and defendants may need to become more practical on the macro level when entertaining or rejecting pre-suit settlement.  The federal courts stand to become overwhelmed with pent-up cases resulting from the COVID-19 quarantine period, be they TCPA or bankruptcy, and relief from the courts may be a longer road than normal. 

And remember, the FCC did not sleep over the quarantine.

By April 3rd 2020, overseas call centers pitching COVID-19-related scam by means of robocalls had spiked throughout the U.S. over the month of March.  In a joint enforcement effort with the FTC’s Bureau of Consumer Protection and the DOJ, the FCC with the support of the Traceback Group, a consortium of phone companies managed by the trade association USTelecom that helps track down suspect calls, identified the U.S. based gateway providers that enabled the call completion in the U.S.  The FCC and FTC in a joint written warning demanded that these gateway providers to stop their suspected facilitation of COVID-19-related scam robocalls.  The FCC also wrote to USTelecom requesting their members to block calls from these gateway providers if these type of robocalls did not stop within 48 hours.  This would have effectively shutdown those providers in the stream of telecommunications transit.  Within 24 hours, those gateway providers stopped terminating those overseas scam robocalls.  Among those gateway providers identified and warned by the FCC was VoIP Terminator d/b/a BLMarketing of Lake Mary, Florida.  This was the first flex of the FCC’s TRACED Act powers since its December 2019 enactment.

By April 28, 2020, the FCC followed up on this by releasing a Notice of Proposed Rulemaking over one-ring international call back scams. The Notice set three important areas of rulemaking under Section 12 of the TRACED Act: 1.) FCC coordination with the Governments of Foreign Countries to address one-ring scams as the scams originate in other countries; 2.) Incentivizing Voice Service Providers to Stop One-Ring Scams by means of a list of permissible categories for carrier-initiated blocking; and 3.) Educate Consumers in conjunction with the FTC to better streamline the complaint and identification process of one-ring scam within the Commission.  While still on the public record review process, the FCC has positioned itself well to make quick work of overseas scams within the near future.  It also has positioned its consumer complaint intake process for alleged robocalls and texts to move and coordinate on a fast-track in that same near future.   With fast-track intake comes fast-track enforcement by the FCC of apparent TCPA violators.

On May 1st 2020, the FCC issued an Order ending warnings to offending robo-callers issuing Notices of Apparent Liabilities (NALs) for TCPA violations.  The Order further extended the statute of limitation under 47 C.F.R. § 1.80 and fines for intentional TCPA violations.  It formalized by FCC Rules the powers granted it under the TRACED Act.  The Order also made clear that violation of caller-ID spoofing, the use of spoofing to scam consumers, still does not require any warning under the Truth in Caller ID Act.  See, 47 U.S.C. § 227(e). It has been almost two years since the FCC Enforcement Bureau came down on Adrian Abramovich’s “Neighbor Spoofing” Telemarketing Operation that resulted in a $120 million fine against the Florida-based time-share marketing company and owner. There was no warning letter in that enforcement.  The Order positions the FCC Enforcement Bureau to move where it had wanted for years, address unlawful and illegal robocallers from under a pincer move.  One side is the shutdown any violator of caller-ID spoofing by blocking from the industry followed by Section 227(e) violation NALs.  The other is the enforcement of TCPA violations for ADTS and lack of consent under NALs and where appropriate refer any criminal matter to the DOJ for prosecution.

Re-calibrating TCPA litigation post COVID-19

Some interesting movements with the TCPA happened while we were in quarantine.  How do we use them here in Florida?  Well, new plaintiffs filing of TCPA claims did have a jump nationally this past April, but that was in large part due to a multi-state coordinated lawsuit against one defendant, Porch.com.  Other than that, new cases remained consistent with a downward national trend of TCPA litigation since 2016.  The quarantines have furthermore backlogged the courts.  Progress on existing cases going to trial may be hampered because of this backlog.  New cases continued to be filed during the shut downs.  So the pipeline of old and new TCPA cases will likely not be cleared out quickly.  Time lines within the courts and on potential motions stand to experience long delays. Settlement may become a more viable option to case resolution depending on the client’s post-quarantine position, and that of the other side.  Both sides may need to give more than typically to make that happen.   

For those in Florida and the 11th Circuit, Glasser still remains the leading case in defining an ATDS when a virtual platform is used to transmit SMS text messages that potentially violate the TCPA.  While case law from other federal circuits may be helpful in demonstrating various aspects of a TCPA claim, it is not the same for ATDS and Florida federal courts.  This may be an increasing issue in forward going claims.   As small businesses try to rally business post-shutdown by SMS marketing to prior customer bases, they may use these platforms more because of cost and ease of use.   Pure reliance on Short or Long codes on the message may not be enough to prevail on a TCPA claim going forward.  More may need to be asked pre-suit, and, more technical review of who these platforms operate may be required by plaintiff and defense counsel alike. That is until the U.S. Supreme Court settles once and for all the circuit split.

Class action punitive claims based on a single text message may need to begin in the Florida courts and work their way up from there to succeed. Changes in the jurisdictional amounts of the Florida courts may place those types of cases more in the county courts as opposed to the circuit courts.  New lines of legal arguments may need to be developed for both plaintiff and defense counsel alike in such instances.

The client before the quarantine may not be the same one post quarantine.  This is true for plaintiffs and defendants alike.  Client concerns may be drawn more to their economic survival than litigation.  If things are bad enough, they may seek bankruptcy protection as businesses or personally as an individual.  For representative plaintiffs that have yet to certify a class, their rights may be locked by their federal receivership unless the case is solid and the Receiver can be convinced to continue on with the lawsuit.  For defendants, automatic bankruptcy stays may sweep the whole case away from defense counsel.  Settlement payments made by bankrupt defendants effectuated within the 90 day look-back period of federal bankruptcy may also be clawed-back from plaintiffs by bankruptcy receivers as secured creditors may have a higher priority in the liquidation process, particularly if it was a small business that accumulated heavy losses during the quarantine.

And then, there is the FCC on the horizon.  As expanded powers under the TCPA have been effectuated by the TRACED Act, the FCC is working full force to aggressively address its first target of one-ring overseas scams.  The Commission has already exercised a pincer approach to quickly shut such scammer down quickly during the COVID-19 quarantine.  One year from now, that position will only be more concerted and effective with coordination of the FTC and DOJ under TRACED Act amendments to Section 227.  The FCC will likely look to the domestic offenders once the overseas objective is under control.  Whether that will help or hurt private TCPA claims seeking punitive class action relief is unclear, but it has the real potential.  It is the storm cloud growing at this time.

In the end, we must soldier forward in a brave new world.  We have cases to make on behalf of consumers and cases to defend on behalf of marketers and their new technologies.  Inasmuch as the TCPA is important to guard consumers from unwanted calls and texts, it tempers marketers to use new technologies to reach the people who want to be reached in a fair and lawful manner. Nothing is fool-proof in technology.  Nothing is certain in litigation.  But one thing is certain for all TCPA practitioners in a post COVID-19 world – it’s going to get interesting.  

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