The U.S. Court of Appeals for Ninth Circuit recently reversed a trial court’s judgment dismissing a federal Telephone Consumer Protection Act complaint brought by a group of home improvement contractors for lack of statutory standing.
In so ruling, the Ninth Circuit held that the contractor plaintiffs had statutory standing under Sections 227(b) and 227(c) of the TCPA because the statutory text includes not only “person[s]” but also “entit[ies]” and registered cell phones that are used for both personal and business purposes are presumptively “residential.”
The Ninth Circuit also held that the contractors alleged a concrete and particularized injury sufficient for Article III standing.
A copy of the opinion in Nathan Chennette, et al v. Porch.com, Inc., et al is available at: Link to Opinion.
As you may recall, the TCPA prohibits calls using automatic telephone dialing systems (“ATDS”) to cell phones, see 47 U.S.C. Section 227(b), and telephone solicitations sent to residential telephone subscribers who have registered their phone numbers on the national do-not-call registry, see 47 U.S.C. Section 227(c). Both provisions provide private causes of action for damages and injunctive relief.
The complaint here alleged that the website defendants’ use of an ATDS to call the contractors’ cell phones violated Section 227(b) and that the websites’ text messages to the contractors’ cell phones that were registered on the national do-not-call registry violated Section 227(c).
The website defendants moved to dismiss, contending among other things that the contractors lacked Article III and statutory standing. The trial court assumed that the contractors had Article III standing but held under the “zone of interests” test of Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014), that the contractors lacked statutory standing under the TCPA. The trial court dismissed the contractors’ complaint with prejudice. The contractors timely appealed.
On appeal, the websites argued that the contractors lacked Article III standing because the contractors were known to solicit business inquiries from potential customers and therefore did not suffer a concrete and particularized injury in receiving solicitations from the websites.
“[T]o satisfy Article III’s standing requirements, a plaintiff must show (1) it has suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Id. (alteration in original) (quoting Friends of the Earth, Inc. v. Laidlaw Env’t Servs., Inc., 528 U.S. 167, 180–81 (2000)).
Furthermore, the Ninth Circuit wrote in Van Patten v. Vertical Fitness Grp., LLC that, in enacting the TCPA, Congress “establishe[d] the substantive right to be free from certain types of phone calls and texts absent consumer consent . . . [and] identified unsolicited contact as a concrete harm.” 847 F.3d 1037, 1043 (9th Cir. 2017).
According to Van Patten, “an effective consent is one that relates to the same subject matter as is covered by the challenged calls or text messages.” Id. at 1044–45. Importantly, “providing a phone number in itself [does not mean] that the consumer has expressly consented to contact for any purpose whatsoever.” Instead, the scope of consent is “related to the reason [the plaintiff] gave his number in the first place.” Id. at 1045–46.
The Ninth Circuit noted that the contractors alleged in their complaint that they received unsolicited, unconsented automated text messages from the websites on their cell phones. Even assuming that the websites acquired the contractors’ phone numbers through publicly available online directories, the Court held that they did not provide “prior express consent” as the Court construed that phrase in Van Patten.
Moreover, the Ninth Circuit concluded that the contractors’ harm was particularized because the TCPA provides that even one unconsented message can violate the statute, and the websites provided no basis to disbelieve the contractors’ allegation that each of them received at least one message. “A plaintiff alleging a violation under the TCPA ‘need not allege any additional harm beyond the one Congress has identified’” to establish Article III standing. Van Patten, 847 F.3d at 1043.
Thus, the Ninth Circuit held that the contractors alleged a concrete and particularized injury sufficient for Article III standing.
The Ninth Circuit also concluded that the contractors had statutory standing under Section 227(b) of the TCPA. The websites argued that the TCPA protects only individuals from unwanted calls, and that the contractors fell outside of the TCPA’s zone of interest. However, because the statutory text includes not only “person[s]” but also “entit[ies],” the Court reasoned that all of the contractors had standing to sue under Section 227(b) of the TCPA.
The contractors who placed their cell phone numbers on the national do-not-call registry also alleged additional claims under Section 227(c). Noting that Section 227(c) and its implementing regulations apply only to “residential” telephone subscribers, the websites argued that because the contractors used their cell phones both for personal calls and for calls associated with their home improvement businesses, they did not qualify as residential subscribers.
The question on appeal was therefore whether a cell phone that is used for both business and personal purposes can be a “residential” phone within the meaning of Section 227(c).
The Ninth Circuit noted that, in the view of the Federal Communications Commission, a subscriber’s use of a residential phone in connection with a home-based business does not necessarily take an otherwise residential subscriber outside the protection of Section 227(c).
Relying on the FCC’s regulations and orders, the Court thus concluded that a presumptively residential cell phone can be residential even when used for both personal and business purposes. In the absence of FCC guidance on the precise question of when a mixed-use phone ceases to become a residential phone or a business phone, the Court held that the contractors’ registered cell phones that are used for both personal and business purposes are presumptively “residential” within the meaning of Section 227(c). At the motion to dismiss stage, the Court therefore concluded that these contractors had standing to sue under Section 227(c).
Nevertheless, the Ninth Circuit also indicated that after discovery, the websites may seek to argue that they have rebutted the presumption of a residential cell phone by showing that the contractors’ cell phones were used to such an extent and in such a manner as to be properly regarded as business rather than residential lines.
Accordingly, the Ninth Circuit concluded that the contractors had standing under Article III and statutory standing under Sections 227(b) and (c) of the TCPA. The Court therefore reversed and remanded to the trial court for proceedings consistent with this opinion.
