Telephone and Texting Compliance News: Litigation Update — Fourth Circuit Adds to TCPA Case Law at Appellate and District Court Levels

The Fourth Circuit, both at the appellate and district court levels, packed several punches in June. At the district court level, a Maryland federal court authored a decision concluding that under the facts at issue, a defendant had not obtained prior express written consent by phone to make certain telemarketing calls. Later in the month, the US Court of Appeals for the Fourth Circuit issued an opinion providing further guidance as to what qualifies as a fax advertisement under the TCPA.

The District of Maryland Nixes Prior Express Written Consent Via Phone Disclosure

The TCPA generally requires companies to obtain prior express written consent before making telemarketing calls using an automatic telephone dialing system or an artificial or prerecorded voice.[1] And a Maryland federal court has now determined that parties may not obtain prior express written consent by way of a disclosure over the phone.

Why? Because while the signature can be captured verbally, this court determined that the underlying agreement that the consumer is accepting must be in writing.[2]

In 2018, plaintiff Deborah Bradley called defendant DentalPlans with the intent of signing up for a dental savings plan. The DentalPlans representative that the plaintiff spoke with confirmed the plaintiff’s phone number and, reading from a script, asked the plaintiff if she consented to DentalPlans contacting her with an automatic dialing system or prerecorded messages. The plaintiff agreed to receive these calls and signed up for a dental account through DentalPlans.[3] When the plan expired, the plaintiff continued to receive pre-recorded calls from DentalPlans seeking to get the plaintiff to renew her dental plan.[4] The plaintiff sued DentalPlans on behalf of herself and a class of former DentalPlans customers, claiming neither she nor the class consented to the artificial or pre-recorded voice calls received from DentalPlans after their plans expired.[5]

The court held that DentalPlans’ “winback” calls to former customers were telemarketing calls and therefore required prior express written consent.[6] The court then addressed the central dispute here – what qualifies as “prior express written consent” under the TCPA. The court explained:

[A] plain reading of these admittedly complex statutes and regulations make clear that the TCPA does, indeed, “require[] that information relating to a transaction or transactions in or affecting interstate or foreign commerce be provided or made available to a consumer in writing.” 15 U.S.C. § 7001(c)(1).

. . . As such, the “consumer disclosure” section of the E-SIGN Act applies, and the required written disclosures outlined in § 64.1200(f)(9)(i) of the TCPA cannot be provided via voice recording. Because these disclosures were not adequately provided, the voice recording cannot constitute a valid written signature.[7]

Ultimately, the court granted the plaintiff’s motion for class certification and denied DentalPlans’ motion for summary judgment. As a district court case, Bradley is not binding but highlights the complexity of the TCPA and care that must be taken when designing consumer outreach programs.

TCPA Suit Over Free Webinar Fax Revived by Fourth Circuit

Plaintiff Family Health Physical Medicine LLC (Family Health) succeeded in reviving its lawsuit against defendant Pulse8 LLC (Pulse8), which was accused of sending faxes in violation of the Telephone Consumer Protection Act (TCPA).[8] While the United States District Court for the District of Maryland granted defendant Pulse8’s motion to dismiss the case, agreeing with Pulse8 that its fax did not qualify as an advertisement under the TCPA, the Fourth Circuit disagreed, reversing and remanding the case.

Family Health alleged that in 2020, Pulse8 sent a fax inviting it to attend a free webinar on medical coding technology, a product that Pulse8 sells.[9] Family Health filed suit alleging that the fax was an unsolicited advertisement and violated the TCPA. Pulse8 countered that the fax did not qualify as an advertisement because the webinar was free.[10] Family Health’s complaint presented four theories for why Pulse8’s fax was an unsolicited advertisement, and the district court held that each theory failed as a matter of law.[11] Family Health appealed the district court’s decision, and the appeal was initially stayed pending the Fourth Circuit’s resolution of another TCPA case, Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, involving the interpretation of an “unsolicited advertisement” under the TCPA.[12]

PDR held that under the TCPA an unsolicited advertisement “does not include offers or solicitations with no commercial component or purpose” and as a result, merely “promot[ing] the quality of a free good or service is not enough to make something an advertisement.”[13] Accordingly, to qualify as an advertisement under the TCPA, there must be a “commercial component” between the fax and the “sender’s business – its property, products, or services.”[14]

With PDR in mind, the Fourth Circuit rejected Family Health’s first and fourth theories as to why the fax qualified as an advertisement. The first theory was insufficient because, under PDR, simply promoting a free webinar, without more, did not make the fax an advertisement. The fourth theory – premised on the fax providing a chance to win a free gift card in exchange for the recipient filling out a survey – likewise did not make the fax an advertisement on its own because Family Health did not claim that Pulse8 was selling gift cards or buying survey data. The remaining theories, however, were a different story.

Under its second theory, Family Health alleged that Pulse8’s webinar was being used to market Pulse8’s own product.[15] More specifically, the complaint alleged that the webinar was about a subject related to Pulse-8’s business, therefore, it was reasonable to infer that Pulse8 sent the fax hoping to persuade recipients to use Pulse8’s products.[16] The Fourth Circuit relied on PDR, reasoning that acceptance of a free good or service can be leveraged into an opportunity for a sales pitch for Pulse8’s products, thereby giving the free good or service the requisite commercial component.[17]

Under its third theory, Family Health claimed the fax was an advertisement because “Family Health could not accept Pulse8’s offer to attend the webinar without providing its contact information and consenting to receiving further promotional materials.”[18] The court agreed, noting that this “familiar marketing tactic gave the fax the requisite ‘commercial nexus’ to Pulse8’s business to survive a motion to dismiss.”[19]

The Fourth Circuit thus concluded that the complaint plausibly alleged that Pules8’s fax was an unsolicited advertisement, which was enough to survive a motion to dismiss. While this was a victory for Family Health at this stage of the litigation, it is yet to be seen whether Family Health’s allegations will be borne out by discovery and whether a class can be certified.

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