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Stay denied: Federal court gives green light to text-spam lawsuit against Google

By Marc Roth

A federal court in Oakland, CA, denied Google’s motion to stay a class-action lawsuit filed against it by named plaintiffs Nicole Pimental and Jessica Franklin.

The plaintiffs allege that Google’s social applications company, Slide Inc., violated the Telephone Consumer Protection Act (TCPA) by using automated dialing devices to send text messages to consumers without their consent.

Google had asked the court to stay the action pending a ruling by the Federal Communications Commission interpreting the TCPA. The court denied that motion.

Disco bawl
Google acquired Slide, the creator of the Disco app that allows people to send text messages to as many as 99 people at one time.

The plaintiffs allege, in a single cause of action, that Google and Slide sent text messages to consumers’ mobile phones without their prior express consent in violation of the TCPA.

Specifically, the plaintiffs allege that Google and Slide “made unsolicited text message calls . . . using equipment that . . . had the capacity to store or produce telephone numbers to be called, using a random or sequential number generator,” i.e., an automatic telephone dialing system (ATDS) under federal law.

An ATDS is defined as “equipment which has the capacity . . . to store or produce telephone numbers to be called, using a random or sequential number generator [and] to dial such numbers.”

Google and Slide denied liability and raised the following affirmative defenses: (1) they obtained the required “prior express consent” because individuals who received text messages knowingly released their telephone numbers to Disco—either directly when signing up for the service and agreeing to the Disco terms of use, or indirectly through the group creators, and (2) the technology used to operate the Disco service did not constitute an “automatic telephone dialing system.”

Furthermore, Google and Slide contend that their technology does not have the “capacity” to store or produce telephone numbers that could be dialed using a random or sequential number generator.

The TCPA regulates telemarketers selling goods and services to prevent any telephone-based abusive or deceptive activity.

Under the TCPA, a consumer’s “prior express consent” is required before anyone may send the consumer an advertisement via text message to the consumer’s telephone.

In March, a separate entity, GroupMe, petitioned the FCC for “clarification” regarding its duty to obtain prior express consent from consumers and to determine whether its equipment falls under the statutory definition of an ATDS.

Specifically, GroupMe sought clarification of the meaning of “prior express consent,” which is not defined by the TCPA.

In addition, GroupMe inquired as to whether the term “capacity” as used in the definition of an ATDS meant “a theoretical, potential capacity to auto-dial, albeit only after a significant re-design of the software, or rather the actual, existing capacity of the equipment at the time of use, could, in fact, have employed the functionalities described in the TCPA.”

Move to stay
Based on the pending petition, Google moved to stay the suit stating that the FCC had primary jurisdiction over the matters and that its ruling, if any, could shed light on the court’s ultimate analysis with respect to plaintiffs’ claims.

Under the doctrine, primary jurisdiction applies only “if a claim requires resolution of an issue of first impression, or of a particularly complicated issue that Congress has committed to a regulatory agency, and if protection of the integrity of a regulatory scheme dictates preliminary resort to the agency which administers the scheme.”

The court found that the doctrine did not apply because the lawsuit did not raise technical or policy considerations solely within the FCC’s expertise and the issues were not particularly within the FCC’s discretion since Congress did not explicitly delegate those issues solely for FCC consideration.

The court found that a delay was not appropriate: “The court is not convinced that the FCC has agreed to issue a ruling, let alone issue a ruling on an expedited basis.”

Moreover, even if the FCC were poised to issue a ruling immediately, inconsistent rulings by the FCC and the court are not likely since the parties’ deadline for hearing motions for summary judgment is Oct. 30, 2012, and trial is set for Feb. 19, 2013.

As the court noted, “the parties need to conduct discovery to obtain the facts and expert opinions necessary, so that once these issues are decided by the FCC or the Court, the Court can apply the undisputed facts to the law on motion for summary judgment, or a jury can find those facts at a trial on the merits. A stay will not permit the parties to obtain the discovery necessary to resolve the factual disputes Defendants raise in their Answer and Affirmative Defenses.”

Why it matters
Businesses cannot rely on the doctrine of primary jurisdiction to shield potential class-action litigation solely because an inquiry pending before a federal agency touches upon the issues raised in the litigation.

The court’s decision also makes clear that defenses to fend off class claims should be prepared in the event refuge under the primary jurisdiction doctrine proves fruitless.

Please click here to read the court’s order denying Google’s stay.

Marc Roth is partner in the advertising, marketing and media division of Manatt, Phelps & Phillips, a New York law firm. Reach him at [email protected].