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HL Chronicle of Data Protection Privacy & Information Security News & Trends
Posted in Consumer Privacy, Privacy & Security Litigation, Social Media

Federal Court Certifies 60,000-Member Class in “Wireless Spam” TCPA Litigation against Insurance Company, for Actions of Its Marketing Vendors

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In a decision with important implications for companies that hire outside marketing firms, a federal judge has certified a class of nearly 60,000 individuals who allegedly received an unsolicited text message from a marketing company hired by Stonebridge Life Insurance Company.

The plaintiff in Lee v. Stonebridge Life Insurance Company and Trifecta Marketing Company, LLC, 3:11-cv-00043 (N.D. Cal.) alleges that both Stonebridge and Trifecta Marketing Group, which contracted with Stonebridge to market Stonebridge’s insurance products, violated the Telephone Consumer Protection Act, 47 U.S.C. §227 (TCPA) by sending a single SMS text message to thousands of mobile phone users.  Under the TCPA, companies face minimum statutory damages of $500.00 per call or text, per person, up to a maximum of $1,500.00 per call or text, per person for “willful and knowing” violations.  A message sent to 60,000 users thus creates a potential exposure of $90 million.  The plaintiff claims that Trifecta Marketing had authority under its marketing agreement with Stonebridge to perform marketing services for Stonebridge, including soliciting through “call backs” to Trifecta’s marketing center that resulted from “wireless spam” sent to potential customers’ cell phones.

Stonebridge opposed class certification, arguing that it cannot be found liable under the TCPA because Stonebridge neither made nor controlled the text message allegedly sent to plaintiffs’ phones.  Indeed, the marketing message did not mention Stonebridge at all; it merely solicited a call to Trifecta’s call center.  The court rejected that argument, finding that the issue could be addressed on a class-wide basis.  More importantly, the court expressed skepticism about the merits of Stonebridge’s defense, indicating that Stonebridge could be found liable for any TCPA violations of its marketers and their third-party vendors.  The case thus highlights the need for vigilance over marketing vendors and contractors whose services may include direct consumer marketing by phone or text message, and careful drafting of contracts with these service providers.

The court also refused to consider the TCPA defense of “prior express consent” as a basis for opposing class certification.  Stonebridge presented evidence that the text messages were sent only to customers that had “opted in” to receive such messages, such that class certification was improper because individual questions as to each plaintiff’s consent would predominate at trial.  The court rejected that argument, finding it more appropriate for merits discovery.

Des Hogan, a partner in the firm’s Litigation, Arbitration and Employment Practice, and Mark Brennan, of the Communications Practice, contributed to this entry.