Strip Club Beats TCPA Case With Human Intervention

The Sapphire Gentlemen’s Club in Las Vegas sends promotional text messages to its customers. Doing so involved multiple steps. First, a Club employee inputs telephone numbers into a mobile marketing website. He does this by either manually typing the number or by uploading or cutting and pasting an existing list of phone numbers to the website. Next, the Club employee types the message’s content, and designates the specific phone numbers to which the message would be sent. He would then click “Send” on the website in order to deliver the messages in real time or at some future date.

In a decision issued earlier this week, Magistrate Judge Howard R. Lloyd of the U.S. District Court for the Northern District of California ruled that this level of human intervention defeated plaintiff’s claim that the Club contacted him using automatic telephone dialing technology in violation of the Telephone Consumer Protection Act.

This decision is important because it interprets and relies upon the FCC’s July Declaratory Ruling and Order regarding the definition of an autodialer. In that order, the FCC refused to establish a bright line rule stating that any human intervention precludes a finding that a given piece of telephone equipment is an autodialer. Instead, the FCC stated that determination would have to made on a case-by-case basis.

In this case, the human intervention was significant. It was not simply limited to an act of uploading telephone numbers to a database as plaintiff claimed. It also involved drafting a message, determining the timing of the message and clicking “Send” to transmit the message. That was enough human intervention to carry the day for the Club. Summary judgment was granted in its favor.


The FCC Broadens TCPA's Reach: More Lawsuits Ahead!


The Federal Communications Commission (“FCC”) issued its declaratory ruling and order addressing over 20 pending petitions on Friday, July 10, 2015. This new ruling effectively requires companies to make a fresh evaluation of their telephone technology and, in most cases, change existing policies and practices. Some of the rulings of general applicability are described in this post. Continue reading this entry

FCC Approves New TCPA Rules


Today, the FCC ruled on 21 long-standing petitions and letters seeking clarifications of the Telephone Consumer Protection Act. FCC Chairman Tom Wheeler’s proposed rules were approved with a 3-2 vote.  While it remains unclear when the FCC will publish the new ruling, it is clear the new rules are mostly bad for businesses which use automatic telephone dialing technology.

The majority of the Commission did not distinguish scammers from legitimate businesses. Commissioner Jessica Rosenworcel cited scammer calls from “Rachel” of the mysterious “Card Member Services” as support for her decision to approve the new rules. Chairman Wheeler cited the 214,000 consumer complaints about robocalls, but gave no breakdown as to how many of these complaints involved con artists and how many related to businesses calling, for example, to collect debt. Continue reading this entry

CFPB Extends TRID Effective Date to October 1


The Consumer Financial Protection Bureau (“CFPB”) announced that it would provide mortgage lenders with additional time to prepare for the highly anticipated TILA-RESPA Integrated Disclosures (“TRID”). Since the issuance of TRID’s final regulations in November 2013, mortgage lenders have been frantically preparing for its effective date of August 1, 2015. Generally speaking, TRID will consolidate mortgage disclosures forms currently required by Truth-in-Lending Act (“TILA”) and the Real Estate Settlement Procedures Act (“RESPA”) into only two forms—the Loan Estimate and the Closing Disclosure—purportedly to assist buyers in understanding the home buying process. According to the CFPB’s Director Richard Corday, the agency now intends to push back the TRID’s effective date to October 1, 2015 due to an unexplained “administrative error.” This announcement comes shortly after the agency declared that for a short period after the TRID’s effective date it would consider a lender’s efforts to comply with new disclosures when enforcing TRID.

CFPB Director Cordray Issues First-Ever Agency Appellate Decision in RESPA Case


The Director of the federal Consumer Financial Protection Bureau (CFPB), Richard Cordray, issued a decision yesterday in the first appeal of a Bureau administrative enforcement action.

Cordray’s decision upholds in part, and reverses in part, a 2014 Administrative Law Judge (ALJ) decision which held that PHH Corp. (“PHH”) violated the Real Estate Settlement Procedures Act (RESPA) by accepting payments for the referral of a settlement service business pursuant to a captive reinsurance arrangement.

CFPB Enforcement counsel (Enforcement) had alleged that PHH participated in a “mortgage insurance kickback scheme” in violation of RESPA for over a decade. Enforcement claimed that PHH, a mortgage lender, referred borrowers to certain mortgage insurers, who in exchange for the referrals, agreed to purchase reinsurance from a PHH subsidiary at supposedly inflated rates, taking the reinsurance fees as kickbacks. Enforcement also alleged that PHH pressured the mortgage insurers into participating in the arrangement and steered business to them “even when it knew the prices [the mortgage insurers] charged were higher than competitors’ prices.” The PHH matter followed a series of settlements between the CFPB and various mortgage insurers settling similar Enforcement allegations.

For more information on the decision, please visit our official update page.