Technology Law Update

Attorney's Faxed Legal Commentaries Are Unsolicited Commercial Advertisements Under the TCPA

A New York appellate panel has upheld a treble-damage award of $21,000 under the Telephone Consumer Protection Act against an attorney for sending who sent unsolicited faxed "commentaries" concerning his field of practice. There is some irony in the fact that the attorney's practice consisted primarily of representing plaintiffs in attorney malpractice cases.

The majority of the panel upheld the trial court ruling that the faxed commentaries constituted unsolicited commercial advertisements under the TCPA, because, among other things, the commentaries contained the name of his law firm as well as contact information and the addresses of the attorney's Web sites, and indirectly advertised the availability and quality of the attorney's services:

Further, all 14 of the faxes sent by Bluestone to Stern constituted unsolicited advertisements. While Bluestone contends that his faxes were purely informational and do not explicitly offer services, his position defies common-sense. The faxes at issue certainly have the purpose and effect of influencing recipients to procure Bluestone's services, which are for the specialized field of legal malpractice claims. First, the faxes include the name of Bluestone's law firm and contact information. Second, while the faxes do not directly offer Bluestone's services as a legal malpractice attorney, they indirectly advertise the commercial availability and quality of such services. Not only do the faxes invite contact for further information but they also list two web sites that boast Bluestone's specialization in attorney malpractice suits. Thus, it is clear that the faxes indirectly proposed a commercial transaction and had the effect of influencing recipients to procure Bluestone's services. Contrary to the dissent's viewpoint, Bluestone's motive is not a factor in the determination that these faxes are advertisements. It is not necessary to probe that deeply, since simply looking at the faxes in the context in which they were sent is sufficient to establish them to be advertisements. The faxed "commentaries" are not just information with an author's name attached, but include the name of the author's law firm and direct readers to his web sites which advertise his professional services. By merely stating on the faxes that they are not advertisements of the availability of services does not make it so, nor should it allow Bluestone to evade the prohibitions of the TCPA (see Rudgayzer & Graft v Enine, Inc., 4 Misc 3d at 7 [finding that a fax mentioning the defendant's company name and contact information that pitches a service under the guise of providing information about it is an advertisement within the meaning of the TCPA]). Moreover, Bluestone's professional role as an attorney specializing in legal malpractice claims supports the conclusion that the faxes advertise his services (id. at 8,[finding that the sender's identity, motives, purposes, and intentions are relevant to whether the fax was merely "information" or "advertising"]).

Judge Kavanaugh dissented, commenting among other things that imputing a promotional purpose to the sender of the faxes "carries with it an enhanced risk that this statute will be applied to ban what is otherwise fully protected speech under the First Amendment."

Judge Kavanaugh went on to say:

The TCPA's constitutionality is grounded in its limitation to commercial speech (Central Hudson Gas & Elec. Corp v Public Service Comm. of N.Y., 447 US 557, 562-563 [1980]). It cannot be used to ban noncommercial speech - and by its terms does not seek to do so. Keeping with that commitment, it should not be read to ban what is otherwise noncommercial speech simply because under the circumstances presented it could be argued that the transmission in question may have some commercial value to the sender. There can be no doubt that fully protected free speech can also contain some element of self-promotion (see generally Bigelow v Virginia, 421 US 809, 818 [1975]; Ginzburg v United States, 383 US 463, 474 [1966]; Thornhill v Alabama, 310 US 88 [1940]), and the mere existence of such a reality does not serve to convert such speech into a [*8]solicitation which may be banned by this statute."

Stern v. Bluestone, No. 1926, 111895/05, 2008 NY Slip Op 611 (N.Y. App. Div., 1st Dept. Jan. 31, 2008)

Opinion: http://www.nycourts.gov/reporter/3dseries/2008/2008_00611.htm

Commercial SMS Text Messages and the Telephone Consumer Protection Act

We recently authored an article in the New York State Bar Association NY Business Law Journal, "Commercial SMS Text Messages and the Telephone Consumer Protection Act," on the applicability of the Telephone Consumer Protection Act to SMS text messages. The article discusses the divergent opinions in Joffe v. Acacia Mortgage, 121 P.3d 831 (Ariz. App. 2005) and  Satterfield v. Simon & Schuster, No. C 06-2893 CW, 2007 U.S. Dist. LEXIS 46325 (N.D. Cal. June 26, 2007).

Here's a link to a reprint of the article provided with the permission of the New York State Bar Association, and here's an excerpt:

Advertisers interested in mobile phone marketing opportunities must be cognizant of applicable laws governing commercial SMS messages, including the TCPA, especially given the rise in claims being brought under the statute. With two courts offering contrasting decisions on the applicability of the TCPA to e-mail-to-phone SMS messages, the law remains highly unsettled in this area. This confusion is further highlighted as mobile technology becomes more sophisticated, particularly with the advent of such multifunctional devices as the iPhone or Blackberry, which, at fi rst glance, look more like mobile computers than mere cellular phones. In the future, as more mobile devices allow for the reading of e-mail and Web site surfing, the capability to receive additional commercial messages and e-mail spam will likely increase, and with it, additional privacy issues affecting businesses are likely to arise as well.

Federal court rules Telephone Consumer Protection Act does not apply to commercial SMS text messages sent to cellular phones

The ruling came a few weeks ago in Satterfield v. Simon & Schuster, No. C 06-2893 CW, 2007 U.S. Dist. LEXIS 46325 (N.D. Cal. June 26, 2007), a case involving the transmission of an SMS text message promoting a popular author's "mobile club" to a cellular phone used by a seven-year-old child. The defendants, the publishing company that contracted for the transmission of the promotional messages and the service provider that actually sent the messages, argued that the subscriber, the child's mother, had consented to the transmission of promotional messages when, in order to receive a free ringtone, she checked the box in an online form labeled "Yes! I would like to receive promotions from Nextones affiliates and brands…."

The question of whether Short Messaging Service (SMS) text messages are governed by the federal Telephone Consumer Protection Act (TCPA) is important to marketers who use SMS to send promotional messages to cellular telephones. The TCPA prohibits any "call" using an "automatic dialing telephone system" to a number assigned to a cellular telephone service without the "prior express consent" of the party to whom the message will be sent, where that party will be charged for the call. The question is also important to cellular carriers who have brought actions against marketers who have sent unsolicited SMS text messages to their subscribers under the TCPA. See, e.g., Cellco Partnership v. John Does 1-50 (D.N.J. complaint filed Oct. 18, 2006). 

Several issues are raised by the application of the statutory language to SMS text messages. Is a text message sent to a cellular telephon a "call" within the meaning of the TCPA? Is the technology used to send the text messages an "automatic dialing telephone system"? Note that the TCPA was enacted in 1991, well before the advent of SMS text messaging, so there is no discussion of the technology in the legislative history. Only one court prior to Satterfield v. Simon & Schuster has ruled on the issue, Joffe v. Acacia Mortgage, 121 P.3d 831 (Ariz. App. 2005). In Joffee, the SMS technology is described as follows:

The text message is initially delivered over the Internet as an e-mail directed to an e-mail address assigned by a cellular telephone carrier to a subscriber. Id. When the e-mail reaches the e-mail address, it is converted automatically by the carrier into a different format that can be transmitted to the customer’s cellular telephone. Id. To illustrate: assume cellular telephone carrier "Wireless" has assigned to its customer cellular telephone number (123)456-7890 and has also given its customer an e-mail address made up of the customer’s cellular telephone number and Wireless’ domain name, wireless.com. An e-mail sent to that e-mail address, 1234567890@wireless.com, will travel from the sender’s computer over the Internet to Wireless’ domain. After the e-mail arrives at Wireless’ domain, pursuant to the particular SMS protocol used by Wireless, Wireless will automatically convert the text of the message into an SMS message and forward the SMS message to its customer’s cellular telephone. Thus, Wireless actually receives the e-mail, and after processing it, directs the message to its customer’s cellular telephone as an SMS message.

The Joffe court relied on this description in concluding that an SMS text message falls within the TCPA. Broadly construing the statutory language to encompass technologies that did not exist at the time of the statute's enactment, the Joffe court concluded that the sending of an e-mail message to a wireless domain constituted a "call" to an "automatic dialing telephone system."

In Satterfield v. Simon & Schuster, Judge Claudia Wilken ruled contrary to Joffe that SMS text messages are not covered by the TCPA, first, because the manner in which the SMS messages were sent by the marketer does not fit the statutory definition of an "automatic telephone dialing system," and second, because the plaintiff had agreed to receive promotional messages under a broadly worded consent provision, executed in connection with the download of a free ringtone.

Aside from the broader issue of whether SMS text messages are covered by the TCPA, Judge Wilkens's ruling on the scope of the consent is of interest. Under the language of the consent, the subscriber agreed to receive promotions from "Nextones affiliates and brands." The message at issue stated that it was "PwdbyNexton," i.e., "Powered by Nextones." The court concluded that regardless of whether Nextones and the publisher that sent the message were "affiliates," the inclusion of the "PwdbyNexton" language in the text message "branded the text message as coming from Nextones; it identified the message with a Nextones brand." Summary judgment was therefore granted on the issue of consent to receive the message at issue.

Representative Association Lacks Standing To Bring Assigned Claims For Unsolicited Faxes Under TCPA

A representative association that accepts assignments of “junk fax” claims under the Telephone Consumer Protection Act  (TCPA), lacks standing to assert the assignor’s claims.   US Fax Law Center v. iHire, Inc., No. 05-1323, 2007 U.S. App. LEXIS 2622 (10th Cir. Feb 7, 2007).

"Advertising Injury" Insurance Policy Provides Coverage For TCPA Violations

An insurance policy that covers "advertising injury," defined as the "written…publication …of material that violates a person’s right of privacy” provides coverage for alleged violations of the Telephone Consumer Protection Act (TCPA) resulting from the sending of unsolicited faxed advertisements.  American Home Assurance Co. v. McLeod USA, Inc., No. 1:05-cv-5173, 2007 U.S. Dist. LEXIS 8706 (N.D. Ill. Feb. 2, 2007).

"Advertising Injury" Insurance Policy Does Not Provide Coverage For TCPA Violations

A liability insurance policy that covers the "advertising injury" offense of "making known ... material that violates an individual's right of privacy" does not provide coverage for violations of the Telephone Consumer Protection Act (TCPA) resulting from the sending of unsolicited faxed advertisements. ACS Systems, Inc. v. St. Paul Fire and Marine Insurance Co., No. B181837, 2007 Cal. App. LEXIS 113 (Cal. Ct. App. Jan 29, 2007).

Non-Commercial Prerecorded Messages Sent To Residential Telephones Must Comply With TCPA Technical Requirements

Telephone calls to private residences that contain non-commercial, prerecorded messages must comply with the Telephone Consumer Protection Act (TCPA) technical requirements concerning identification of the entity responsible for initiating the call and inclusion of appropriate contact information. State of Oklahoma ex rel. Edmondson v. Pope, No. CIV-06-487-C, 2007 U.S. Dist. LEXIS 2506 (W.D. Okla. Jan. 9, 2007).

Consent To Release Contact Information To Trade Group Members Does Not Constitute Consent To Receive Unsolicited Faxes

The consent of a member of a trade group to the release of its contact information, including telephone facsimile numbers, to other members of the trade group, does not constitute "prior express invitation or permission" under the Telephone Consumer Protection Act (TCPA) to receive unsolicited commercial faxes from another member of the trade group. Travel Travel Kirkwood, Inc. v. Jen N.Y., Inc., No. ED87441, 2006 Mo. App. LEXIS 1740 (Mo. Ct. App. Nov. 21, 2006).

Verizon Files TCPA Suit Against Wireless Marketers

The actions were filed in New Jersey state court against Florida- based marketing companies that used autodialers and prerecorded messages to contact Verizon wireless customers.

News Coverage: http://news.com.com/Verizon+Wireless+sues+telemarketers/2100-1036_3-6039271.html

Use Of Automatic Dialing System To Send Text Messages To Cellular Telephones Violates TCPA

The use of an automatic dialing system to send messages to cellular telephones in the Short Messaging Service (SMS) format constitutes a "call" that violates the Telephone Consumer Protection Act (TCPA). Joffe v. Acacia Mortgage Corp., No. CA-CV 02-0701 (Ariz. Ct. App., Sep. 20, 2005). The appeals court ruled that the prohibition in the TCPA against the use of automatic dialing systems to make "any call" to a telephone number assigned to a cellular telephone service was not limited to two-way real time voice intercommunications. The court noted that its interpretation of the term "call" was consistent with other provisions of the TCPA that prohibit making a call to a cellular or residential telephone number using an artificial or prerecorded voice, a form of call that "has no potential for a real time voice intercommunication."
The opinion is available at http://www.cofad1.state.az.us/opinionfiles/CV/CV020701.pdf