Privacy Law Blog : Privacy Lawyers & Attorneys : Proskauer Rose Law Firm : CAN-SPAM, FCRA, FACTA

            In the case, the plaintiff filed a class action lawsuit against Nextel South Communication for a violation of the TCPA. Id. at *2. The plaintiff alleged that 24,000 unsolicited blast-fax advertisements were sent to him and others like him in violation of the TCPA. Id. at *2, 9. Seeking indemnity and contribution for any liability Nextel might have in the underlying suit, Nextel filed a third-party complaint against Southeast Wireless. Id. at *3. Southeast Wireless then requested Transportation Insurance Company (“Transportation”), its commercial liability insurer, to defend it in the class action. Id. Transportation refused to defend Southeast Wireless and disclaimed coverage. Id. Ultimately, Southeast Wireless settled with the plaintiff and assigned its right to seek insurance coverage from Transportation to the plaintiff. Id.

            The case came to the Florida Supreme Court on a certified question from the U.S. Court of Appeals for the Eleventh Circuit. Id. at *1-2. Essentially, the Eleventh Circuit asked whether the policy provides coverage for a TCPA violation when no private information is revealed in the fax. Id. at *2.

            Answering the certified question in the affirmative, Florida Supreme Court Justice Polston, writing for the court, applied the plain meaning approach to the interpretation of the insurance contract. Id. at *14. The court focused on the three essential elements of the coverage provision, “publication,” “material,” and “right of privacy,” and referred to a dictionary to define the first two terms, which were left undefined in the insurance contract. Id. at *8, 9.

            The court concluded that sending 24,000 unsolicited fax advertisements constitutes “publication” because the faxes disseminated information to the public. Id. at *9. The court concluded that the faxes were “material” because a faxed advertisement “consists of matter” and “may be synthesized or further elaborated or may serve as the basis for arriving at fresh interpretations or judgments or conclusions.” Id. (internal quotations and ellipses omitted).

            Most importantly, the court noted that “the plain meaning of ‘right to privacy’ is the legal claim one may make for privacy, which is to be gleaned from federal or Florida law.” Id. at *10. The court stated that “[i]n this case, the source of the right of privacy is the TCPA.” Id. Citing several federal district and circuit court cases for the proposition, the court stated that the TCPA “provides the privacy right to seclusion.” Id. The court therefore rejected Transportation’s argument to the contrary that the “right to privacy” applies only to the content of the material and should not apply to a TCPA violation where the content of the material disseminated does not violate a person’s right to privacy. Id. at *12.

            Concurring separately in the result, Justices Pariente and Canady both found ambiguity in the coverage provision and stated that they would find that coverage existed by applying the rule that coverage ambiguities are resolved in favor of the insured. Justice Pariente stated that the policy is ambiguous as to whether coverage exists when it is the content of the material that violates a person’s right of privacy, or when it is the act of sending the material that violates a person’s right of privacy. Id. at *16. Similarly, Justice Canady found ambiguity in the words “material” and “publication.” Id. at *18.

            Although Penzer dealt with a privacy violation arising from a fax communication, the Florida Supreme Court’s approach to CGL coverage is not explicitly limited to faxes. It is important to note that the Florida Supreme Court’s approach to addressing CGL coverage for an injury affecting a “person’s right of privacy” appears to be entirely dependent upon an underlying law providing for a right to privacy. The court’s focus on the TCPA protecting the right to seclusion specifically suggests that the court will look to the specific form of privacy protected by the underlying law, rather than vague notions of privacy. If the underlying law providing the right to privacy does not vindicate a particular form of privacy, it is possible that the Florida Supreme Court would find that no CGL coverage exists.

In the putative class action lawsuit, the plaintiff alleged that Selling Source sent him and others like him SMS text messages in violation of the TCPA. In pertinent part, the TCPA prohibits a person from making a call, other than a call made for emergency purposes or with the prior express consent of the recipient using any automatic telephone dialing system or an artificial or prerecorded voice. Selling Source moved to dismiss the complaint for the failure to state a claim upon which relief can be granted, alleging, amongst other things, that the TCPA does not apply to SMS text messages because SMS text messages are not a “call” within the meaning of the statute and that the plaintiff failed to demonstrate that he was charged for the text message he allegedly received.

The trial court noted that the meaning of “call” as used in the TCPA was ambiguous, but concluded that the meaning of “call” includes text messages. In reaching its conclusion, the court relied in part on the Ninth Circuit’s decision in Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 954 (9th Cir. 2009), which noted that “text messaging is a form of communication used primarily between telephones,” and in part on the FCC’s own interpretation of the TCPA such that it applies to text messages. The court also held that a person does not need to be charged to receive the text message to maintain a suit under the TCPA. The court rejected Selling Source’s argument that the TCPA could not apply to text messages because the statute was enacted before the advent of text messaging. Although the trial court dismissed the complaint because of the plaintiff’s failure to meet the federal pleading requirements, the court granted the plaintiff leave to amend to correct the pleading deficiencies.

The event underlying the action was a mobile marketing campaign.  The plaintiffs alleged that Timberland contracted with AirIt2Me and GSI for the promotion of a holiday sale in 2005.  As a part of the promotion, Timberland, by and through these agents, allegedly sent thousands of unsolicited SMS text messages to potential customers' cell phones.  Two recipients of the text message initiated a class action alleging violation of the TCPA, which prohibits unsolicited voice and text calls to cell phones, using an auto-dialing system, unless the recipient has given prior consent.  The statute also prohibits companies from initiating telephone solicitations to individuals on the national Do-Not-Call list, unless the individual has given prior express consent or has an established business relationship with the company.

Any company engaging in a mobile marketing campaign should utilize a strategy that meets its business objectives, but also takes the appropriate steps to protect itself from potential liability under the applicable laws.  In the case of text messages, a company must obtain an “opt-in” to send messages to a mobile device.  This settlement illustrates the high pay-outs that can result from legal actions.  Violations of the TCPA can result in statutory damages of $500 per violation (i.e., for each individual text message).

When undertaking these types of campaigns, companies must comply with both the TCPA and the Controlling the Assault of Non-Solicited Pornography and Marketing Act (“CAN-SPAM”), as well as the various state laws that apply to mobile promotional messaging.  All of these laws require companies to obtain express consent from individuals before sending promotional messages to their wireless devices.  In addition to these statutes, both the Mobile Marketing Association and the Wireless Association have best practice guidelines to provide companies with guidance in crafting marketing policies.  Companies should review their mobile marketing policies to ensure they are compliant, and should distribute these policies to all applicable employees and agents.  In addition, when utilizing any third-party agent to facilitate mobile marketing campaigns, a company should require that the agent is complying fully with the applicable laws and regulations.  Any contracts with third-parties should include warranties and indemnification as to these requirements.