Appellate Court Reignites TCPA Case Over Debt Collection Calls

California’s “Right to Cure” safe-harbor eviscerated as Ninth Circuit Court of Appeals backs consumer’s legal right to sue for alleged TCPA violations related to unanswered non-telemarketing calls.

3/1/2018 10:51 PM

Appellate Court Reignites TCPA Case Over Debt Collection Calls

Doubling down on its 2017 standing-decision in Van Patten v. Vertical Fitness Group, LLC (holding that “a violation of the TCPA is a concrete, de facto injury” that is sufficient to confer Article III standing”), the U.S. Court of Appeals for the Ninth Circuit has held, in an unpublished opinion, that allegations that a consumer received more than 290, unauthorized prerecorded (and all but two unanswered) collection calls on her cell phone in violation of the Telephone Consumer Protection Act established a concrete injury sufficient to give the consumer her day in court.  The Ninth Circuit also held that the banks could not rely on the “Right to Cure” provisions of California’s Rosenthal Fair Debt Collection Practices Act to shield it from liability under the act because the banks’ alleged violations caused harm to the consumer that could not be undone. 

The ruling, which came down on February 28, 2018, has ongoing important implications for defendants who challenge TCPA and other cases at the pleading stage.  The ruling has also essentially rendered California’s liability-shield clause meaningless because it seems to now only apply to violations that have not yet occurred. 

In the case, Romero v. Department Stores National Bank, et al., No. 16-56265, 2018 WL 1079728 (9th Cir. Feb. 28, 2018), the consumer failed to make payments on her credit card and started to receive collection calls from the banks.  The consumer filed a complaint in the U.S. District Court for the District of California against the banks, alleging the banks violated the TCPA and the Rosenthal Act by calling her cell phone nearly 300 times using an automatic telephone dialing system regarding a debt the consumer conceded she owed. 

The district court dismissed the consumer’s complaint.  Although the consumer alleged injuries of “lost time, aggravation, and distress,” which she claimed were “the exact harm[s] that Congress wanted to eliminate with the TCPA,” the district court found that none of the calls caused a concrete injury and, therefore, the consumer had no right to sue the banks.  In reaching this conclusion, the district court considered three categories of phone calls.  First, scrutinizing missed calls that the plaintiff did not hear ring, the district court held that the banks’ use of an ATDS was a “mere procedural violation” and reasoned that the consumer could have been injured by calls of which she was unaware at the time they were made.  Second, examining calls the consumer heard ring but did not answer, the district court “[v]iew[ed] each call in isolation,” asserting that “no reasonable juror could find that one unanswered phone call could cause lost time, aggravation, and distress, or any injury sufficient to establish standing.”  Third, addressing calls that the consumer answered and then spoke with the banks’ agents, the district court found that because she did not present evidence that the banks’ use of an ATDS “caused her greater lost time, aggravation, and distress than she would have suffered had the calls . . . been dialed manually,” the consumer did not suffer an injury in fact.

The district court also ruled in the banks’ favor on the consumer’s Rosenthal Act cause of action.  The district court found that the banks complied with the statutory safe harbor provision, which shielded the banks from liability under the act, when they promptly notified the consumer that they had ceased placing all calls on her account after they received the consumer’s complaint about the calls. 

The Ninth Circuit reversed the district court’s dismissal and remanded the case for further proceedings.  Citing its decision in Van Patten, the appellate court concluded that the TCPA provided a cause of action for the autodialed debt collection calls that the consumer received after she asked the banks to stop calling and that such a violation of the TCPA was sufficient to establish standing (a legal right to sue) at the pleading stage.  In doing so, the Ninth Circuit rejected the banks’ attempt to distinguish Van Patten, ruling that “[t]he TCPA is not limited to telemarking calls.” 

Limiting the statutory safe harbor provision to violations that are able to be “cured,” the Ninth Circuit also ruled that the banks were not entitled to the Rosenthal Act’s “Right to Cure” defense because they could not undo the harm to the consumer that their alleged violation already caused.  The appellate court explained that the banks could not reverse the stress, annoyance and aggravation caused or give back the time wasted and, therefore, could not undo the harm they caused the consumer as a result of their calls, “by merely ceasing calls going forward.” 

ACA filed an amicus (friend of the court) brief with the Ninth Circuit in Romero on March 15, 2017 to support Spokeo-standing and “right to cure” defenses in debt collection TCPA cases in order to build an arsenal of case law to help curb the explosion of frivolous consumer suits and class actions in federal court against the credit and collection industry, and reduce the consumer bar’s ability to weaponized the TCPA, FDCPA and corresponding state debt collection laws for the purpose of generating million-dollar claims against debt collectors who visit no harm on consumers.  ACA is disappointed the Ninth Circuit chose not to affirm the district court’s well-reasoned decision in Romero.  However, this loss does not take away from the 34 industry-favorable decisions (wins) ACA has helped to achieve for its members through the Industry Advancement Program, which decisions have been cited and relied upon by courts across the country in thousands of other industry cases.

Although the opinion is unpublished, so not binding for precedent in the Ninth Circuit, Romero still has important implications.  Coupled with Van Patten, Romero lowers the bar for what constitutes a concrete injury in cases involving violations of federal statutes and made it much more difficult for defendants to challenge these cases at the pleading stage with a motion to dismiss for lack of standing.  It seems as if a plaintiff does not need to allege any actual injury resulting from a statutory violation.  Instead, plaintiffs apparently need only allege that a federal statute was violated to establish a legal right to sue at the pleading stage.  And as the overly-broad Romero decision now stands, debt collectors may not be able to avail themselves of the Rosenthal Act’s liability shield because, since their conduct most likely has already occurred in the past, their alleged violations cannot be “cured.”  But it remains to be seen if other judges will use similar reasoning in cases involving California’s “Right to Cure” provision or comparable state statutes, such as in West Virginia, going forward. 

If you missed any of the articles previously published in ACA Daily that provided more detailed information about Industry Advancement Program supported cases, like the Romero case, you can always see the archived articles on the Industry Advancement Program website. Watch for updates when decisions are issued in these cases and learn more about new cases supported by the Industry Advancement Program in the future by reading ACA Daily and logging onto the Industry Advancement Program website throughout the year.

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