Group of professionals discuss finance

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Banking and Finance Law Daily, March 31, 2014

State Farm robocall case remanded; “called party” is current subscriber under Telephone Consumer Protection Act

By J. Preston Carter, J.D., LL.M.

Addressing for the first time the meaning of “called party” under the Telephone Consumer Protection Act (TCPA), the United States Court of Appeals for the Eleventh Circuit determined that it means the current subscriber. The court reversed and remanded the lower court’s grant of summary judgment to State Farm in a case accusing the company of robocalling a cell phone subscriber’s housemate for a bad debt (Osorio v. State Barm Bank, F.S.B., Gilman, Circuit Judge).

Background. While applying for car insurance with State Farm, Clara Betancourt, at the suggestion of a State Farm agent, opened a State Farm credit-card account so that the policy premium could be charged to the credit card. During the application process, Betancourt gave State Farm a cell phone number. She contended during the lower court proceedings that she gave the number only as an emergency-contact number and that it belonged to her housemate Fredy D. Osorio, with whom she shared a cell-phone plan. State Farm maintained that Betancourt gave the number as her work-phone number and that it does not collect emergency-contact information from policyholders.

After Betancourt failed to timely pay the minimum balance due on her credit card, the State Farm agent placed 327 autodialed calls (robocalling) to the cellphone over a six-month span in an attempt to collect the balance due.

Osorio sued State Farm under the TCPA (47 U.S.C. §227) which provides a damages remedy for cell phone subscribers who receive autodialed phone calls without having given prior express consent to receive such calls. State Farm sued Betancourt for the balance due and legal expenses on her delinquent credit-card account and for its legal expenses in defending itself against Osorio’s TCPA lawsuit, the latter claim based on Betancourt’s alleged negligent misrepresentation regarding the telephone number that she had provided to State Farm.

The district court ruled for State Farm with regard to both complaints. The court first held that Betancourt had consented to Osorio receiving calls from State Farm and that neither Betancourt nor Osorio had effectively revoked this consent because they did not do so in writing. Second, on State Farm’s breach-of-contract claim, the court held that Betancourt was delinquent on her credit-card debt. The court’s final ruling was that Betancourt had negligently misrepresented that the cell phone number was hers, thereby causing State Farm to incur approximately $132,000 in legal fees defending itself against Osorio’s action.

TCPA. The TCPA prohibits autodialed calls “to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call” without the prior express consent of the called party.

Called party. The judge noted that the Eleventh Circuit had not addressed the meaning of the term “called party” prior to this case and that only the Seventh Circuit had done so. That court concluded that, since Section 227 uses the phrase “called party” seven times, four denoting the current subscriber, one denoting whoever answers the call, which is usually the subscriber, and the others having “a referent that cannot be pinned down by context,” the implication is that “consent must come from the current subscriber” (Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637, 640 (7th Cir. 2012)). The Eleventh Circuit agreed.

The Eleventh Circuit also agreed with the Seventh Circuit’s determination that “called party” does not refer to the intended recipient of the phone call. “Intended recipient” does not appear in Section 227. “Recipient” does appear in a context where it means “current subscriber.”

Prior express consent. To fall within Section 227’s consent exception, the court said that State Farm must demonstrate that it had the consent of Osorio, as defined by the common law, to call the cell phone. One way for State Farm to do so would be by demonstrating that Betancourt had an agency relationship with Osorio that permitted her to consent to Osorio receiving the calls, and by showing that she exercised that authority in this case by giving the number to State Farm in connection with her debt.

However, the key facts regarding agency “are clearly in dispute” in the case, the court found. Betancourt and Osorio testified that they had never given each other authority to consent to phone calls from third parties. However, if, as Betancourt claims, she told State Farm that the number was to be sued only for emergencies, a jury could find that she was exercising only a limited scope of agency. Therefore, the Eleventh Circuit said the issue must be submitted to a fact finder.

Revocation. The question of whether either Betancourt or Osorio effectively revoked whatever consent State Farm might have had to call the number should also proceed to a jury, the court determined. It presumed from the TCPA’s silence regarding the means of revoking consent that Congress sought to incorporate the common law concept of consent, which generally allows oral revocation. The court noted that recent FCC guidance has confirmed that called parties may revoke their consent orally. Osorio says that he twice told State Farm to “stop calling.” State Farm says that he did not. Therefore, the court said, the question should go to a jury.

Charge requirement. The Eleventh Circuit held that the TCPA does not exempt all autodialed calls for which there is no charge. Applying canons of construction, the court said the rule of the last antecedent requires the phrase “for which the called party is charged for the call” to apply to “any service” rather than “cellular telephone services.” Moreover, another provision of Section 227 allows the FCC to exempt calls to a cell phone “that are not charged to the called party,” which would be meaningless if the statute already exempts all calls for which the party is not charged. Finally, the court said its interpretation is consistent with decisions of its sister circuits, and held that Osorio is not required to prove that he was charged individually for each of the autodialed calls.

Negligent misrepresentation. Regarding State Farm’s third-party complaint against Betancourt that she knew the cell phone number was Osorio’s number but negligently represented to State Farm that it was her own, the court determined that genuine disputes of material fact require a trial.

The case is No. 13-10951

Companies: State Farm

Attorneys: Gregory Andrew Beck (Gupta Beck PLLC) for Fredy D Osorio. Paul L Nettleton (Carlton Fields Jorden Burt, PA) for State Farm Bank, FSB.

MainStory: TopStory AlabamaNews FloridaNews GeorgiaNews Privacy

Banking and Finance Law Daily

Introducing Wolters Kluwer Banking and Finance Law Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.

A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.