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July 25, 2016

Pennsylvania Court Rules against Plaintiff in the Business of Filing TCPA Lawsuits

By Bryan Quigley, Senior Vice President, Strategic Communications

Want to become a professional plaintiff? Don’t quit your day job.  A Pennsylvania court recently ruled in Stoops v. Wells Fargo Bank that serial plaintiff Melody Stoops has no standing to bring a Telephone Consumer Protection Act (TCPA) case against defendant Wells Fargo. 

According to her testimony, Ms. Stoops owned at least 35 cell phones solely for receiving calls that could be used to bring TCPA suits.  But the court found that since Ms. Stoops had manufactured the claims for the purpose of litigation, there was no actual injury.

For plaintiffs like Ms. Stoops, the TCPA is a tempting way to make easy money.  

The law was passed in 1991 as a consumer protection statute amid an epidemic of abusive telemarketing calls, the kind Americans were inundated with during dinnertime.

The TCPA was originally crafted to empower consumers to file small claims lawsuits ranging from $500 – $1,500 for each call violation.

Today however, one violation can anchor a class action lawsuit, quickly escalating damages into the tens of millions. The highest settlement, thus far, reached $75 million.

Both the Los Angeles Clippers and the Los Angeles Lakers basketball teams were sued for millions under the TCPA because the teams sent a simple “thank you” text message to fans texting personal messages to be displayed in the arena during a game.

To make matters worse, some TCPA violations are beyond a company’s control. For example, if a company calls a number provided by a customer that has since been reassigned to someone else, the current number holder can bring a class action lawsuit on their own behalf and on behalf of other individuals that received similar calls. And they have no duty to tell the company of the reassignment or even answer the phone. 

With 90 percent of Americans owning wireless telephones, phone numbers are in short supply. This has led to a spike in reassigned telephone numbers. According to some estimates, 37 million phone numbers are reassigned each year.

Phone number churn is where some see a financial opportunity. In her deposition, Ms. Stoops detailed how she requested numbers that were located in economically distressed locations for her three dozen cell phones, believing the previous owners of those phone numbers had a higher likelihood of receiving debt collection calls.

She testified that she intentionally added minutes to the phone lines that received the most wrong number calls to facilitate further receipt of calls, because EACH wrong number call is another claim worth money.

Ms. Stoops filed at least nine lawsuits and made claims against roughly 20 others through demand letters.

Stoops’ cases are part of a broader trend, as TCPA lawsuits have increased 940 percent between 2010 and 2015.

Plaintiffs’ lawyers themselves are also driving the increase in lawsuits. According to testimony from a Senate Commerce Committee hearing, in 2014 plaintiffs’ lawyers received $2.4 million from TCPA settlements, while the plaintiffs they represented received an average of $4.12 each.  

Unfortunately, the FCC has only made TCPA litigation worse. In its 2015 TCPA Omnibus Declaratory Ruling and Order, the agency determined that if a call is made to a consumer from any device capable – now or in the future – of being used for automated sequential number phone calls, the business can be found in violation of the law.

The good news is that the Stoops v. Wells Fargo Bank case sets an important precedent for limits to predatory TCPA litigation. It is one of the first to use the Supreme Court’s ruling in Spokeo to stop plaintiffs from bringing lawsuits where there is no concrete harm. 

But while the case may help other defendants of these lawsuits, if Congress does not take a close look at how this outdated statute can be reformed, businesses may rethink their use of texts and cell calls for wanted information, such as prescription reminders, notification of flight delays or power outages.

According to the American Association of Healthcare Administrative Management’s testimony in front of the Senate Commerce Committee, hospitals are required under the Affordable Care Act to contact patients post-discharge, a practice that lowers the rate of readmission.  But the TCPA makes it difficult to comply with this requirement without putting the hospitals at risk for high dollar lawsuits.

To be clear, TCPA reforms are not about allowing unwanted robocalls to home phones or smart phones. But when TCPA loopholes become a lawsuit business, it is clear the law needs to be reformed. 

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