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July 03, 2020

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Ninth Circuit Holds in Wrong Number TCPA Case That “Called Party” Does Not Mean “Intended Recipient”

Liability arising out of calls to reassigned numbers presents one of the biggest challenges to TCPA compliance.  Despite the availability of numerous private scrub services aimed at determining whether a number has been reassigned, there still exists no surefire method of knowing whether and exactly when a cellular telephone number has been reassigned.  And with number recycling occurring on a massive scale across the country, callers can still step on a reassigned number liability landmine despite earnest and good faith attempts to avoid calling such numbers using the best-available tools technology can provide.

The TCPA prohibits calls using an automatic telephone dialing system and an artificial or prerecorded voice without the consent of the “called party”.  In early rulings, some lower courts interpreted the phrase “called party” as the “intended recipient” of the call, which practically speaking means a caller could avoid liability for a reassigned number call by demonstrating it had consent of the prior subscriber it was intending to reach.  Later, the Seventh and Eleventh Circuits, the FCC, and several other lower courts concluded that the “called party” means current subscriber of the call, which practically speaking means a caller is in effect strictly liable for calls made after a number is reassigned, even if it had the consent of the prior subscriber, and even if it had no idea the number had changed hands.

In N. L. v. Credit One Bank, N.A., No. 19-15399, 2020 U.S. App. LEXIS 17434, at *9 (9th Cir. June 3, 2020), the Ninth Circuit addressed this issue and held the lower court did not err when providing jury instructions that defined the term “called party” as either the “subscriber” or “nonsubscriber, customary user of the phone.”  The court stated that the caller’s “intent to call a customer who had consented to its calls does not exempt [the caller] from liability under the TCPA when it calls someone else who did not consent.”

The court’s interpretation was based primarily upon the following five aspects of the TCPA’s statutory language:

  1. The TCPA “nowhere references an ‘intended’ recipient of the calls.”

  2. The TCPA’s consent provision is based upon the “prior express consent of the called party,” and it would be “odd if ‘called party’ referred to some person external to the potentially actionable communication.”

  3. The TCPA’s prohibitions extend to “any service for which the called party is charged for the call,” and a “called party” who is “charged for the call” cannot be the “intended” recipient who was not actually called.

  4. The recent amendments to the TCPA under TRACED likewise contain references to “called party”, including requiring the FCC in passing exemptions to specify “the number of such [exempted] calls a calling party may make to a particular called party.” Those additions to the TCPA reference 47 U.S.C. § 227(b)(2)(C) “which treats ‘called party’ as the subscriber.”

  5. The TCPA also requires the FCC to prescribe rules that require a “called party’s” line to be released within 5 seconds after a dialing system is notified that the call has been hung up. The court found those references to “called party . . . clearly refers to the person who answers, because only that person can ‘hang up.’”

    The court also disagreed with the appellant’s arguments that the overall purpose of the TCPA, or that the FCC’s attempts at creating a reassigned number safe-harbor supported the “intended recipient” interpretation.  The court found that “i[f] a caller’s intent could defeat liability, the safe harbors would be unnecessary.” 

Lastly, the court found that callers have “solutions” and “safeguards” available to callers to avoid calling reassigned number.  While true to some degree, the reality is that current technology has its limitations, and even the best of tools cannot completely eliminate the risk of unknowingly dialing a reassigned number. 

There were a few interesting nuances in the court’s opinion that are also worth addressing.  First, in examining the text of the TCPA, the court noted that only calls that are “made” are actionable under the TCPA.  There is very little authority interpreting what it means to “make” a call.  However, in the course of examining the statutory text, the Ninth Circuit remarked that “the ‘call’ that is ‘made’ is the call that is received, for it is this received call that provides the basis for the private right of action and thus civil liability.”

We have previously addressed lower court rulings similarly interpreting the term “made” in the context of text messages.  This may turn out to be an impactful aspect of the court’s ruling because it endorses the idea that the mere initiation of a call, without any evidence of its receipt, is not actionable under the TCPA.  Of course, the next logical question is what it means to “receive” a call.  Must the call be answered, or is it enough that the call causes a phone to ring, buzz, chime, or make a notation in the phone’s call log?  What about calls that go unnoticed because a cell phone is turned off?  And perhaps more importantly, what about calls that are never “received” because they are filtered by a call blocking application?  This is a modern-day “if a tree falls in the forest” paradigm, and this aspect of the court’s opinion may be a silver lining that helps drive answers to this important question as the opinion percolates through the lower courts.

Next, while the court endorsed the lower court’s jury instruction that “called party” can mean the “subscriber” and “customary user”, it did not “decide what the result would be if one, but not the other, had consented.  This open-ended aspect of the court’s ruling is somewhat concerning.  It seems obvious that the answer should be that “either” is sufficient to avoid an unfairly incongruous application of the term “called party” as between the caller and the recipient of the call.

Finally, in the wake of the D.C. Circuit’s opinion in ACA International there is still the lingering question of whether, regardless the interpretation of “called party”, a caller has the right to reasonably rely upon the consent it obtained of the prior subscriber.  That is a slightly different legal question stemming from the FCC’s and D.C. Circuit’s recognition of that right as a valid basis for the FCC’s 2015 creation of the now-invalid one-call safe harbor for reassigned numbers (which was found invalid because the FCC’s limitation of the safe-harbor to “one” call was found arbitrary).  Some lower courts have recognized this right, but the issue was not addressed by the Ninth Circuit in its ruling, meaning that this argument should remain a viable defense in future cases.

The court’s opinion in Credit One isn’t earth-shattering, and is largely consistent with the conclusions reached by other circuit courts, lower courts, and the FCC.  However, it means that the status-quo remains for now, and callers will continue to face potential liability arising out of reassigned number calls, with no surefire way of avoiding such risks.  That may change once the FCC’s reassigned number database and corresponding safe-harbor are rolled out, but until that point in time, callers are left to rely upon a patchwork of less-than-perfect solutions to avoid the risk of a reassigned number call.

Copyright © 2020 Womble Bond Dickinson (US) LLP All Rights Reserved.National Law Review, Volume X, Number 156

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About this Author

Artin Betpera, Class action litigation lawyer, Womble
Partner

Artin is a partner in the firm’s business litigation practice group.  Precise and analytic, Artin brings over a decade of experience to bear on complex litigation problems.

Artin adeptly manages significant volumes of litigation for some of the country’s largest banks and financial institutions, never losing sight of providing an exceptional level of service to his clients.  He has been a dedicated financial services litigator since starting the practice of law at ground-zero of the financial crisis, affording him with an unparalleled depth of...

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