Telephone and Texting Compliance News: Litigation Update — TCPA Defense Post-Chevron: Insights from Cacho v. McCarthy & Kelly LLC

Defending against claims under the Telephone Consumer Protection Act (TCPA) requires a strategic approach focused on compliance, documentation, and robust legal defenses. In this article, we focus on a recent decision from the Southern District of New York in the case of Cacho v. McCarthy & Kelly, No. 23-cv-11157, 2024 WL 3293628 (S.D.N.Y. July 3, 2024), which provides valuable insights into TCPA compliance and defense strategies post-Chevron.

1. The Impact of Loper Bright on TCPA Cases

On June 28, 2024, the Supreme Court struck down Chevron, U.S.A., Inc. v Natural Resources Defense Council, Inc., 467 US 837 (1984) in Loper Bright Enterprises v. Raimondo, No. 22-451, 2024 WL 3208360 (US June 28, 2024). As applied to the TCPA, under Chevron, courts routinely deferred to the Federal Communications Commission’s (FCC) regulations and interpretations. With Chevron dismantled, defendants now have the opportunity, in appropriate cases, to ask courts to independently interpret statutory ambiguities — though, as Cacho demonstrates, this may not necessarily result in different outcomes.

2. Key Takeaways from Cacho v. McCarthy & Kelly

In Cacho v. McCarthy & Kelly LLP, the plaintiff alleged that the defendant’s firm violated the TCPA by making unsolicited telemarketing calls to his cellphone, which was registered on the National Do Not Call Registry. Plaintiff sought declaratory relief, statutory and punitive damages, and attorneys’ fees for the alleged TCPA violations.

The defendant filed a motion to dismiss on three grounds: First, it argued the plaintiff’s cellphone subscription did not qualify him as a “residential telephone subscriber” under the TCPA. Second, the calls were informational, not actionable telephone solicitations or telemarketing. Third, the defendant was not vicariously liable for the actions of the telemarketers who allegedly called the plaintiff.

With Chevron no longer in effect, the US District Court for the Southern District of New York independently examined the TCPA’s language. The court conducted an extensive analysis to determine whether cellular phone subscribers qualify as “residential subscribers.” Though Loper Bright opened the door for a new argument, the court ultimately agreed with the FCC’s interpretation and reaffirmed that wireless subscribers on the National Do Not Call Registry can be considered residential subscribers under the TCPA:

Construing the TCPA according to its plain language, a “residence” is simply “[t]he place where one actually lives,” that is, one’s “dwelling.” Residence, Black’s Law Dictionary (11th ed. 2019). . . A “subscriber” is “[a] person who makes a regular payment in return for entitlement to . . . access to a commercially provided service.” Thus, a residential subscriber is one who maintains a phone “for residential purposes.” . . . The Court therefore concludes that extending Section 227(c) to residential subscribers’ cellphones is consistent with the TCPA’s statutory purpose.

As to the defendant’s second argument, considering the context of the calls, the court found that the plaintiff adequately pleaded that the purpose of the calls was to encourage him to purchase the defendant’s legal services, even if the payment would be on contingency. The court noted that, although the alleged representation agreement did not require the plaintiff to pay the defendant directly, “the Court must apply ‘common sense’ rather than rigid formalism to decide whether the calls sought to encourage a purchase of services.”

The defendant, however, found traction with its third argument regarding a lack of vicarious liability. The court noted that the plaintiff’s conclusory allegations that the defendant had the right to control telemarketers were insufficient, and that the mere fact of live transferring calls did not establish an agency relationship with actual or apparent authority. The court explained, “It is the nature of a third-party telemarketer that it will transfer the leads it receives to a party who can use them,” but “that does not mean that the telemarketer is acting on the authority of another, rather than on its own authority in the hope of making a sale.” Therefore, the court dismissed the case for failure to state a claim.

3. Strategic Implications for TCPA Compliance

Cacho is instructive as it is one of the first decisions in which a court has had to wrestle with a post-Chevron landscape and highlights the increased latitude courts now have. While the defendant prevailed on the issue of vicarious liability, the decision illustrates why TCPA compliance remains key — while Loper Bright provides defendants a new argument in their holster, it does not guarantee that a court will decide to shift away from the FCC’s positions on key issues.

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