Last month, we blogged about the U.S. District Court for Northern District of California’s recent decision entered in Luna v. Shac, LLC, — F. Supp. 3d –, No. 14-cv-00607 (N.D. Cal. Aug. 19, 2015), which awarded summary judgment to the defendant-gentleman’s club in a Telephone Consumer Protection Act (“TCPA”) class action.  You can read that post here.  In short, the court held that the defendant’s dialing/texting platform did not constitute a prohibited autodialer under the TCPA in the wake of the FCC’s July 2015 omnibus TCPA Order – i.e., (1) adding numbers to a database (either by manually typing the phone numbers, or by uploading or cutting-and-pasting from an existing list of number); (2) drafting the content of the text messages for each campaign; and (3) selecting the numbers to call and clicking “send” (one-click) to transmit the messages–because of the level of human intervention in dialing. Notably, summary judgment briefing in Luna wrapped up before the FCC Order was released, but the plaintiff noticed the Order as supplemental authority in opposition to the defendant’s motion for summary judgment. The defendant responded explaining why the FCC Order did not pose an obstacle to summary judgment.  The court also cited the Order in its decision.
Continue Reading Postscript to Luna v. Shac LLC: Human Intervention Still Precludes Finding That Strip Club’s Dialing Platform Constitutes an Autodialer Under the TCPA

In a big win for Yahoo!, the U.S. District Court for the Southern District of California denied certification of a putative class in a suit alleging that Yahoo! violated the Telephone Consumer Protection Act (“TCPA”).  The litigation arose out of claims that Yahoo! spam-texted consumers by allowing its users to send text messages from a computer to a mobile phone.  In order to send a text message via Yahoo! Messenger, the user must either select the recipient’s name from the user’s Yahoo! contact list or manually input the recipient’s mobile number in the Messenger window.  Yahoo!, then, automatically checks to see if anyone has used its Messenger service to send a message to that mobile number.  If not, Yahoo! sends a “Welcome Message” to the recipient providing a general explanation of the feature.  Yahoo! users agree to the terms of service, and over the years some of these terms of service have included consent for Yahoo! to send text messages.  The plaintiffs claimed that the “Welcome Message” violates the TCPA prohibition on sending automated text messages through an “automatic telephone dialing system” without the recipient’s consent.
Continue Reading Yahoo! Says Yahoo! In Defeating Class Certification in TCPA Texting Case

On August 19, 2015, in Luna v. SHAC, LLC, No. 5:14-cv-00607 (N.D. Cal.), the Northern District of California issued one of the first decisions interpreting the Telephone Consumer Protection Act’s (“TCPA”) definition of “automatic telephone dialing system” (i.e., autodialer) following the FCC’s July 2015 omnibus TCPA orderLuna may serve as guidepost for future litigants, as the key to the court’s decision lies in the degree of human involvement in the call making process.

In Luna, the defendant-gentleman’s club engaged a third-party mobile marketing company to provide a web-based platform for sending promotional text messages to its customers.  The process to send the text messages through the web-based platform involved multiple steps, all of which required human involvement.  First, an employee would input telephone numbers into the platform manually, or by uploading or cutting and pasting an existing list of phone numbers.  Next, the employee would log in to the platform to draft the message content.  The employee, then, would designate specific phone numbers to which the message would be sent.  Finally, the employee would click “send” on the website to transmit the message to the defendant’s customers.  The messages could be transmitted in real time or as prescheduled messages sent at a future date. 
Continue Reading Court Holds That Human Intervention Covers Strip Club From Liability in TCPA Autodialer Class Action

We all love a good bargain, but sometimes a good deal seems too good to be true.  In 2011, Cynthia Spann went bargain-hunting at a California J.C. Penney, and walked out convinced that she had saved over 30%.  However, she later discovered the products she bought at a “bargain” price had never really been sold at full price.  As we have written previously, pricing and discounting claims are a frequent target of FTC enforcement actions, competitive challenges at the National Advertising Division, and plaintiffs’ attorneys.   After learning about the alleged false discounting, Spann brought a class action on February 8, 2012, alleging violations of California’s Unfair Competition Law, California’s False Advertising Law, and California’s Consumers Legal Remedies Act.  On May 18, 2015, the United States District Court for the Central District of California granted certification of the class action, serving as a timely reminder for retailers and businesses everywhere that businesses must carefully monitor pricing practices to ensure compliance with state and federal law regarding false and deceptive pricing.

According to Spann’s complaint, J.C. Penney’s false advertising campaign was “massive, years-long, pervasive[,] [and] consistent across all” private and exclusive brands of apparel and accessories.  The essential aspects of the advertising campaign are familiar to many American shoppers: J.C. Penney stores and websites would feature both an “original” or “regular” price and a substantial dollar/percentage discount, reinforcing the message that the customer had received a bargain by including a line for “Total Savings Today” on receipts.  As the FTC notes in its Guides Against Deceptive Pricing, this is a totally legitimate form of advertising as long as the original/regular price is genuine; that is, “the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time.”  However, if “the former price being advertised is not bona fide but fictitious”—in other words, if an “inflated price was established for the purpose of enabling the subsequent offer of a large reduction”—then “the ‘bargain’ being advertised is a false one.”  California law is also rather clear on this topic:  “No price shall be advertised as a former price of any advertised thing, unless the alleged former price was the prevailing market price as above defined within three months next immediately preceding the publication of the advertisement.”

Continue Reading Court Grants Class Cert. in Deceptive Pricing Action Against Clothing Retailer

Risk-Free-TrialAs we’ve mentioned before, and as this year is unfolding, it looks like the Federal Trade Commission (“FTC”) is even more desperate to enforce the Restore Online Shoppers’ Confidence Act (“ROSCA”) than we are to find good skin care products.  The FTC has begun expanding its enforcement of ROSCA into various industries, including now the skin care industry.  Perhaps more importantly, the FTC is increasing the stakes on what constitutes adequate disclosures, forcing many marketers to spend less time looking in the mirror and more time looking at their online disclosures.

Last week, the Central District of California entered a Temporary Restraining Order and the FTC issued a complaint, alleging that since at least 2010, a number of defendants had marketed and sold skin care products on a variety of websites that ran afoul the ROSCA, the FTC Act, and the Electronic Funds Transfer Act (“EFTA”). 
Continue Reading Court Attempts to Smooth out ROSCA Violations

pate In “The War of the Roses” Kathleen Turner delivered the most dramatic “woof” in movie history when her character implied that the pate she just served was made from the family dog. While dramatic and intentional, rarely, if ever, should any company take a line from this movie and intentionally imply anything about its warranty claims. Indeed, the opposite is most often true; companies should strive to be clear and express about what is and is not covered in a warranty. This is particularly so where determined and creative consumers try to find implied warranties despite the company’s best efforts to be clear and precise in drafting the warranty. Too frequently plaintiffs succeed in finding implied warranties.

For example, a review of recent cases filed in California shows that plaintiffs look to the overall purchasing experience and statements made about the products purchased to try to find an implied warranty.
Continue Reading The Importance of Coordination in Avoiding Implied Warranty Claims

keepcalmLast week, a federal judge in the Northern District of California denied AT&T’s motion to dismiss the FTC’s lawsuit against the company concerning its advertising and business practices for its mobile wireless data plans.

As we noted last fall, the FTC accused AT&T of misleading millions of its customers by marketing “unlimited” data plans, but then “throttling,” or reducing data speeds, for unlimited plan customers after they used a certain amount of data in a given billing cycle.  As a result of the throttling, customers’ smartphone applications, such as GPS, would not function as they would under higher internet speeds.  The FTC asserted that AT&T had been throttling data speeds for its unlimited data customers since 2011, and that it has throttled at least 3.5 million customers a total of more than 25 million times. 
Continue Reading Think You Are Exempt from FTC Jurisdiction? Think Again, Judge Says after Throttling AT&T’s Motion to Dismiss FTC Lawsuit

On February 4, 2015, in Glauser v. GroupMe, Inc., No. 4:11-cv-02584, the U.S. District Court for the Northern District of California struck a blow to class action plaintiffs asserting claims under the Telephone Consumer Protection Act (“TCPA”), interpreting the TCPA’s definition of “automatic telephone dialing system” (“ATDS”) narrowly to mean equipment that has the “present capacity” – as opposed to “potential capacity” – to perform autodialing functions.

In GroupMe, the plaintiff received several text messages that were sent through GroupMe’s group messaging application, which allows users to create a “group” of personal contacts and transmit text messages to all members of the group at the same time.  One of the plaintiff’s friends had created a group and sent a text to the group members seeking to arrange a poker game; group members, in turn, began responding via text message to all other members about the game through GroupMe’s platform.  After receiving these messages, in May 2011, the plaintiff filed a putative class action, alleging that GroupMe violated the TCPA by sending text messages using an ATDS without his prior express consent.  The TCPA defines ATDS as equipment that “has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.”

Continue Reading Court Rules That Dialing Equipment Must Have “Present Capacity” to Autodial to Come Within the Telephone Consumer Protection Act

In every contract parties try to limit their liability. As a result, drafters put in very broad limitations of liability, which, up to a point, are fine and should be used. However, the problems arise when an entity tries to draft a limitation of liability that is so broad that it goes against public policy and state statutes. This is what recently happened in the case of Rossi v. Photoglou (Court of Appeals of California, Fourth District Division Three [9/29/2014]).

The case dealt with a cast member from “The Real Housewives of Orange County,” Gretchen Rossi, and her claim that her former friend Jay Photoglou was harassing and stalking her. At the trial level, Rossi was successful and recovered more than $500,000 in compensatory and punitive damages. The court dismissed the counterclaim by Photoglou against Rossi for libel, slander and invasion of privacy. It based the dismissal on the release signed by Photoglou which shielded not only the producers of the program, but also other cast members from liability. However, the Court of Appeals did not agree and reversed that finding because it held that all three of his claims involved intentional torts, and courts have often held that one cannot waive liability for intentional torts.

Continue Reading Too Much of a Good Thing Can Hurt You