The U.S. District Court for the Northern District of Illinois recently held that the automatic stay in bankruptcy does not, by itself, operate to revoke prior express consent under the federal Telephone Consumer Protection Act (TCPA).
However, the Court also held that, in this particular case, the debtor had sufficiently alleged that she had not given consent to the creditor or debt collector defendants in the first place, and thus allowed the debtor’s individual and putative class TCPA claims to go forward.
In addition, the Court rejected the debtor’s attempt to bring TCPA class claims for injunctive and declaratory relief, holding that Fed. R. Civ. P. 23(b)(2) does not apply to the debtor’s TCPA claim because every violation of the TCPA creates statutory damages.
A copy of the opinion in Cholly v. Uptain Group, Inc. is available at: Link to Opinion.
The plaintiff debtor alleged that a creditor and a debt collector allegedly “hired” by the creditor violated the TCPA and the federal Fair Debt Collection Practices Act (FDCPA), when the debt collector allegedly contacted the debtor during her bankruptcy.
The debtor filed bankruptcy on July 31, 2014. At some “unspecified time” prior to July 31, 2014, the debtor incurred a debt with the creditor. At some point prior to Sept. 18, 2014, the creditor purportedly “hired” the debt collector to attempt to collect the debt. The debt collector allegedly made nine “non-emergency” calls to the debtor between Sept. 18, 2014 and May 29, 2015, supposedly using an automatic telephone dialing system.
As you may recall, the TCPA prohibits debt collection calls “other than calls made for emergency purposes” or with the called party’s prior express consent, that are “made using an automatic telephone dialing system or artificial or prerecorded voice to a cellular telephone.”
The debtor asserted her TCPA claim as an individual claim and also as class action claim under Federal Rules of Civil Procedure 23(b)(2) and 23(b)(3). Rule 23(b)(2) permits class actions where “the main relief sought is injunctive or declaratory relief.” Rule 23(b)(3) relates to class claims for monetary damages.
For her TCPA claim, the debtor alleged that the creditor and debt collector violated the TCPA by (1) contacting her to attempt to collect a debt without her consent, and (2) in the alternative, to the extent she gave either defendant consent to contact her, the consent was revoked by the imposition of the automatic stay when she filed for bankruptcy.
The defendants filed a motion to dismiss the individual claims and a motion to strike the class claims. After the defendants filed their motions, the debtor abandoned her FDCPA claim, leaving only the individual and putative class TCPA claims.
Turning first to the individual TCPA claim, the Court held that the debtor had sufficiently alleged that she never gave the defendants consent to contact her. In so doing, and because it was ruling on a motion to dismiss, the Court refused to consider a document attached to the creditor’s motion to strike that purportedly showed the debtor had explicitly provided written consent. Thus, the Court denied the defendants’ motion to dismiss with respect to the debtor’s TCPA claim.
However, the Court rejected the debtor’s alternative argument that, to the extent she had provided prior express consent, her consent was revoked by imposition of the automatic stay when she filed for bankruptcy.
The Court noted that the Federal Communications Commission (FCC) has ruled that “consumers may revoke consent in any manner that clearly expresses a desire not to receive further messages.” See In re Rules Implementing the Tel. Consumer Prot. Act of 1991, 30 FCC Rcd 7961, 7996 ¶ 63 (2015). Relying on the 2015 FCC order, the debtor argued that “any manner” includes a “notice sent by a bankruptcy court to a caller that an automatic stay is in place.”
The Court rejected this interpretation of the 2015 FCC order. It held that the FCC’s order provides that a “consumer” and “not a third party” may revoke prior consent. Thus, the Court held, the automatic stay from the bankruptcy court (a third party) could not possibly have revoked any prior express consent from the debtor.
Next, the Court turned to the debtor’s class allegations.
It struck the debtor’s Rule 23(b)(2) class claims for injunctive and declaratory relief. In so ruling, the Court held that Rule 23(b)(2) does not apply to the debtor’s “TCPA claim because every violation of the TCPA creates statutory damages.”
However, it denied the defendants’ motion to strike the debtor’s other remaining TCPA class claim for the same reasons it denied the motion to dismiss her individual claim. In addition, and in light of the purported consent form attached to the defendants’ motion to strike, the Court held that additional discovery was necessary to determine if the debtor’s TCPA class claim could proceed to certification (i.e., it expressed concern over the debtor’s ability to adequately represent the putative class).
In sum, the Court granted the defendants’ motions in part and denied them in part, leaving only a single count for individual and putative class TCPA claims.