9th Circuit TCPA Ruling Blurs Lines Between Business, Home Cellphones

A 9th U.S. Circuit Court of Appeals ruling on violations of the Telephone Consumer Protection Act blurs the lines between residential and business phone numbers in such cases and could make it more difficult for defendant companies to have TCPA suits dismissed early, attorneys told us Thursday. The decision in Chennette v. Porch (docket 20-35962) has “shifted the burden to the defendant” in TCPA cases involving business to business calling to show that the receiving number isn’t a residential use cellphone, said Kelley Drye attorney Becca Wahlquist in an interview.

“In the absence of FCC guidance on this precise point, we hold that plaintiffs’ registered cell phones that are used for both personal and business purposes are presumptively ‘residential,’” wrote Judge William Fletcher. Judge Daniel Bress concurred and Judge Sandra Ikuta dissented.

The ruling “enforces what the [Do Not Call] registry was intended to do,” said LawHQ attorney James Wertheim, who represents the 51 home improvement contactor plaintiffs in the case against companies GoSmith and Porch.com. The companies scrape webpages for business phones belonging to home contractors and text them messages offering client leads. The defendants argued in part that the numbers they were calling had been listed with the intent to receive business calls, while the plaintiffs argued the numbers belonged to their personal cellphones and some had been registered on the DNCR. The 9th Circuit ruling reversed a lower court’s dismissal of the case over standing.

The three-judge panel ruled that cellphones are “preemptively residential” even when used for both personal and business purposes, and that businesses are “entities” under the TCPA, giving them standing to sue over TCPA violations. This “collapses” the ability of TCPA defendants to have cases dismissed based on “zone of interest” arguments that the plaintiffs are private businesses with publicly listed numbers, said attorney Eric Troutman. The 9th Circuit “may have just ended zone of interest arguments in TCPA cases within its footprint -- and that’s catastrophic to the battle against manufactured lawsuits,” Troutman wrote in a blog post.

The FCC regulations put the burden of showing a phone is residential on the phone’s owner, said Nelson Mullins attorney Steven Augustino, who called the 9th circuit ruling “an overreach” “They didn’t really have to do this,” he said. There is a pending petition from 2016 at the FCC on determining whether a phone is residential or for business use. “This is before the FCC,” Augustino said. This case shows the FCC needs to rule on the matter, he said.

The decision also makes it harder for defendants by requiring them to show that a given cellphone number is used for business, said Wahlquist. The opinion lays out criteria for courts to consider that attorneys will likely have to submit evidence on, making it more time-consuming and expensive to have cases dismissed, she said. The factors laid out by majority opinion author Fletcher include who pays for the phone, whether it's registered with the telephone company as a business line and “other factors bearing on how a reasonable observer would view the phone line.”

The ruling also splits from the 11th U.S. Circuit Court of Appeals by treating a single text message as sufficient harm to provide standing, Wahlquist said. “Receiving even one unsolicited, automated text message from GoSmith is the precise harm identified by Congress,” wrote Fletcher. In Salcedo v. Hanna (docket 17-14077), the court ruled that a single unsolicited text message isn’t a concrete harm. That’s a matter that could be decided by the U.S. Supreme Court, Wahlquist said.

The majority “usurps the role” of the FCC and “creates its own regulatory framework” wrote Ikuta in her dissent. “The majority has leaped over the FCC’s limitations to provide its own, much laxer, regulatory framework and procedures that broadly allow anybody who owns a cell phone to sue telemarketers under the TCPA.”

With the motion to dismiss reversed, Wertheim said the case will proceed in U.S. district court, where it will be connected with other cases as part of a “mass action” with over 1,000 clients. Wertheim said defense attorney concerns about the ruling are “ridiculous.” “The Do Not Call registry is easy to use,” he said.