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Posts Tagged ‘U.S. Court of Appeals’

Ninth Circuit: Creditors May Be Vicariously Liable for TCPA Violations Based on Common Law Ratification Principles

Posted on: April 16th, 2019

By: Nikki Sachdeva

In a recent opinion, the U.S. Court of Appeals for the Ninth Circuit reversed a district court’s grant of summary judgment in favor of a creditor, finding that common law principles of ratification may create vicarious liability under the Telephone Consumer Protection Act (TCPA). In Henderson v. United Student Aid Funds, 2019 U.S. App. LEXIS 8597 (9th Cir. Mar. 22, 2019), the Court heard an appeal by named plaintiff Henderson in a putative class action brought under the TCPA. After ceasing to make payments on her student loan, Henderson began receiving calls from several debt collection companies. Henderson alleged that the pattern of the calls, which included several prerecorded messages to a cellular telephone number she had not provided in connection with her loan application or consented to be called on, evidenced the use of a combination of skip-tracing and autodialing. Such combined use is prohibited by the TCPA.  47 U.S.C. § 227(b)(1)(A)(iii).

United Student Aid Funds (“USA Funds”), which owned Henderson’s loans, had hired a loan servicer, which in turn hired debt collectors to collect on the unpaid loans. USA Funds did not have contractual relationships with the debt collectors, nor did it have day-to-day interactions with them. However, USA Funds had access to the debt collectors’ performance reports and had previously reviewed the debt collectors’ call notes upon identification of an issue with improper calling practices. As to the loan servicer, USA Funds monitored its regulatory compliance and, while it did not have the ability to fire debt collectors, USA Funds had the ability to ask the loan servicer to replace debt collectors.

In 2017, the U.S. District Court for the Southern District of California granted summary judgment in favor of USA Funds. The district court rejected Henderson’s arguments that there was a triable issue of fact as to whether USA Funds could be liable under theories of classical agency or implied actual authority. Further, finding that there was no principal-agent relationship between USA Funds and the debt collectors, the district court held that USA Funds could not be vicariously liable under a ratification theory.

The Ninth Circuit, in a 2-1 decision, reversed the district court’s grant of summary judgment and remanded for further proceedings. The Court held that there was a material issue of fact as to whether USA Funds ratified the debt collectors’ calling practices. According to the Court’s opinion, federal common law principles of ratification may create vicarious liability under the TCPA even where the contractual agreements at issue state and/or suggest an independent contractor relationship rather than an agency relationship. First, the Court held that ratification may create an agency relationship where none existed before where the acts are “done by an actor… who is not an agent but pretends to be.” The Court noted that the debt collectors told borrowers they were calling on behalf of USA Funds and accepted payments on USA Funds’ behalf. Finding that there was a triable issue of fact, the Court continued: “a reasonable jury could conclude that USA Funds accepted the benefits—loan payments—of the collectors’ calls while knowing some of the calls may have violated the TCPA. If a jury concluded that USA Funds also had ‘knowledge of material facts,’ USA Funds’ acceptance of the benefits of the collector’s unlawful practices would constitute ratification.”

The Ninth Circuit’s decision in Henderson raises issues for creditors and other businesses who engage third parties to conduct borrower or consumer calls on their behalf. Businesses should be mindful that they may be exposed to vicarious liability under the TCPA based on improper conduct by third parties even where there is no contractual relationship with the entity making the allegedly violative telephone calls.

If you have any questions or would like more information, please contact Nikki Sachdeva at [email protected].

Ninth Circuit Compounds ATDS Confusion in TCPA, Causing FCC to Seek Further Comment

Posted on: October 8th, 2018

By: Matt Foree

As we previously discussed in the ACA International decision, the U.S. Court of Appeals for the D.C. Circuit recently rejected the Federal Communications Commission’s (“FCC”) guidance concerning the definition of automatic telephone dialing system (ATDS), one of the key components of liability in the Telephone Consumer Protection Act (“TCPA”).  Among other things, the TCPA prohibits using an ATDS to make calls to a cellular telephone without consent.  Since the D.C. Circuit’s ruling, courts have wrestled with the analysis of what qualifies as an ATDS, which has created a patchwork of decisions.  Some courts determined that the FCC’s pre-2015 guidance on the topic is no longer relevant.  Other courts have relied on that previous FCC guidance in their rulings.

On September 20, 2018, the U.S. Court of Appeals for the Ninth Circuit added to the confusion.  In the Marks v. Crunch San DiegoLLC case, the court analyzed a device called the Textmunication system, which is a web-based marketing platform used to send promotional text messages to a list of stored telephone numbers.  In analyzing whether the device was an ATDS, the court determined that the FCC’s pre-2015 guidance on the definition of an ATDS were no longer binding. Therefore, it determined that only the statutory definition of ATDS remains, such that it analyzed the device at issue under the definition in the TCPA. The statute provides that an ATDS is “equipment which has the capacity—(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.”

The court struggled with the statutory language, finding that it is ambiguous on its face, such that it turned to other aids in interpreting it. Among other things, the court looked at the “context and structure of the statutory scheme.”  In doing so, it determined that, although Congress focused on regulating the use of equipment that dialed blocks of sequential or randomly generated numbers, the statutory language extended to equipment that made automatic calls from lists of recipients.  Therefore, reading the ATDS definition in context and with a view to its “place in the overall statutory scheme,” the Ninth Circuit concluded that the “statutory definition of ATDS is not limited to devices with the capacity to call numbers produced by a ‘random or sequential number generator,’ but also includes devices with the capacity to dial stored numbers automatically.”  Accordingly, the court read the statute to provide that ATDS means “equipment which has the capacity—(1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers.”

In May of this year, the FCC had previously sought comment on the contours of the ATDS definition in light of the ACA International decision.  Significantly, on October 3, 2018, after the Marks ruling, the FCC requested further comment on interpretation of ATDS in light of the Marks decision. Specifically, the FCC sought further comment on how to interpret and apply the statutory definition of ATDS in light of the Marks decision, as well as how that decision might impact the analysis of the ACA International case.  Comments are due October 17, 2018, with reply comments due on October 24, 2018.

If you have any questions regarding the current status of ATDS analysis, the Marks decision, or the FCC’s request for further comment, please contact Matt Foree at [email protected].

 

Salary History And Wage Gaps

Posted on: April 10th, 2018

By: Rebecca J. Smith

The U.S. Court of Appeals for the 9th Circuit, which heard the case of Rizo v. Fresno County Office of Education en banc last year, has changed the 9th Circuit’s position and found that an employee’s prior salary – either alone or in a combination of factors – cannot be used to justify paying women less than men in comparable jobs.

“The Equal Pay Act stands for a principle as simple as it is just:  men and women should receive equal pay for equal work regardless of sex” Judge Stephen Reinhardt wrote in the opinion.   The opinion clearly establishes that an employer cannot justify a wage differential between male and female employees by relying on prior salary.

In the ruling made on Monday, April 09, 2018, the en banc panel overturned the earlier panel’s decision looking at the history of the act and indicating that Congress simply could not have intended to allow employers to rely on past discriminatory wages to justify continuing wage differentials.  One of the biggest issues, going forward after this decision will be whether negotiated salaries are included within the equal pay statutes.  Judge M. Margaret McKeown indicated in her concurring opinion that she was concerned about chilling voluntary discussions between employees or potential employees and employers when an employee is attempting to use prior salaries as a bargaining chip.

If you have any questions or would like more information, please contact Rebecca Smith at [email protected].

Do You Have a Constitutional Right to Smoke on Public Property?

Posted on: November 9th, 2012

By: Sun Choy

According to the United States Court of Appeals for the Eighth Circuit, there is no constitutional right to smoke on public property.  In Gallagher v. City of Clayton, Missouri, the court rejected plaintiff’s request to declare smoking “a new fundamental right ‘because of tobacco’s ancient traditions in American history’” as well as his other constitutional challenges.  Last month, DeKalb County, Georgia passed a similar ban on smoking in public parks.  Are we seeing a national trend?  If so, will there be more constitutional challenges?  Given the Eighth Circuit’s decision, future plaintiffs who also “ecstatically enjoy[] smoking tobacco products” while on public property will be hard pressed to survive a motion to dismiss.