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Ninth Circuit Ruling on Texting Provides Guidelines For The Marketing Industry

Posted in Entertainment Law, Privacy

by Scott Hervey

A ruling earlier this month by the Ninth Circuit provided three guidelines all marketing experts and their counsel should take note of.   These guidelines address the extent to which the Telephone Consumer Protection Act (“TCPA”) (and most likely other Federal regulations on telemarketing) impacts texting as part of a marketing campaign. 

In the case at issue, Simon & Schuster hired a third party to manage the promotional campaign for a new Stephen King book, including securing a list of 100,000 cell phone numbers from the licensing agent for Nextones. Nextones offers consumers free cell phone ring tones in exchange for the consumer providing various information, including a cell phone number, and agreeing to receive promotions from Nextone, its “affiliates and brands.”

The plaintiff, a person who signed up to receive a free ring tone from Nextones, received a text message from Simon & Schuster and then sued the book publisher for violating the TCPA. The TCPA provides in pertinent part:

It shall be unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States—

 

(A)   to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice (emphasis added) —

 

(iii) to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call.

 

The TCPA defines an automatic telephone dialing system as any equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator.

In its defense Simon & Schuster argued that (1) it did not use an automatic telephone dialing system; (2) that the text sent to the plaintiff was not a “call;” and (3) that the defendant consented to receiving such messages. Each defense highlights individual lessons all marketing professionals should take away from this case.

 

Lesson One: Do Not Use An Automatic Telephone Dialing System

 

Simon & Schuster claimed that when it sent out the complained of text message it was sent to specific numbers and not generated randomly. The court correctly identified that the TCPA is not concerned with whether the complained of message is sent out randomly, but rather whether the equipment used to send out the text message is capable  of random generation. There was not enough information presented during the trial for the court to determine whether the machine used by Simon & Schuster’s marketing partner had such capacity. 

 

The lesson to be learned here is to be certain the equipment used to send text messages is not capable of randomly generating telephone numbers. If the service is contracted out to a third party, marketing experts should be certain that the third party represents and warrants, that they will use equipment that lacks such capability.

 

Lesson Two: A “Call” Can Also Be A Text Message

 

Simon & Schuster also raised the defense that the TCPA only restricts “calls” and that the sending of a text message is not a call. The Ninth Circuit, deferring to the Federal Trade Commission’s stated position on the issue, held that under the TCPA a “call” encompasses both voice calls and text calls to wireless numbers. Marketing experts should anticipate that courts will expand this analysis to other legislation dealing with telemarketing restrictions.

 

Lesson Three: The “Express Consent” Exemption Will Be Narrowly Construed

 

The TCPA exempts those calls “made with the prior express consent of the called party.” This exception can also be found in other federal telemarketing regulations such as the Telemarketing Sales Rules and the Federal Do Not Call statutes. 

 

In the instant case, the plaintiff consented to receiving promotional material from Nextones or its “affiliates of brands.” The court determined that Simon & Schuster did not fall under either. The term “affiliate” is a legal term of art referring to a corporation that is related to another corporation by shareholders or other means of control. The record in the instant case confirmed that Nextones did not own or control Simon & Schuster, and Nextones was not a Simon & Schuster subsidiary.

 

This entire situation could have been avoided had Nextones drafted its opt in/consent to receive promotional material language differently. Had the language read as follows, a lawsuit may have been avoided:

I would like to receive promotions from Nextones, its affiliates, brands, and third parties with whom they do business or have a contractual relationship as well as their affiliates, clients and persons with whom they do business.

 

Marketing experts and their counsel should ask to review a copy of the express consent language used by the party supplying the telephone numbers. Additionally, marketing experts should require the supplying party to represent and warrant that the intended recipients of the solicitation have expressly consented to its receipt.