A pending New York bill, A.679/S.2407, would amend the state’s chief consumer protection law to raise guaranteed minimum statutory damages forty-fold, to $2,000 per sued-over transaction. Combine that with class action features that would enable multiplicative application to whole classes of repeat transaction, and the result should terrify business [Jonah Knobler, New York Law Journal]
An unusually strong New Jersey law, the Truth-in-Consumer Contract, Notice and Warranty Act (“TCCWNA”), “prohibits consumer documents from containing provisions that violate clearly established rights or responsibilities,” whether or not the business that distributed the document then acts on the provision. Businesses that imprudently employ standard-form contracts available from office-supply stores, for example, may violate the law if the language deviates (as it often will) from more pro-consumer New Jersey doctrines. The law carries a $100 per-infraction fee that can be multiplied to large numbers applied across a range of transactions. A cottage industry of entrepreneurial suit-filing has grown up under the statute but now, in the case of Spade v. Select Comfort, a unanimous New Jersey Supreme Court has ruled that only consumers who have suffered actual damage can sue under the law, though damages can be non-monetary. The decision is likely to cut back on entrepreneurial uses of the law and in particular class actions where no evidence can be shown that a document’s improper wording harmed many members of a putative class. [Ryan P. Phair and Emily K. Bolles (Hunton & Williams), Lexology; earlier here, here, and related]
“More than 25 years after its passage, a federal telemarketing law hasn’t just created a cottage industry for lawyers – it has spawned a group of professional plaintiffs like [Melody] Stoops who are armed with several cell phones for the purpose of receiving debt collection calls often intended for other individuals.” [John O’Brien, Legal NewsLine]
Forethought goes into the question of how to be legally injured by unlawful calls in the manner most lucrative under the Telephone Consumer Protection Act (TCPA):
Individuals receiving calls they believe to be in violation have two options to try to maximize recovery.
-Answer the phone, tell the company to stop calling and hope the calls keep coming. Those calls could be construed as “willful” violations of the TCPA and lead to triple damages; or
-Don’t answer the phone, never tell the company to stop calling but chronicle how many times it does. This would lead to only $500 claims but keeps the company calling.
The “wait and build damages” strategy can sometimes pay off nicely:
“Mr. Spencer is seeking to exploit the TCPA to recover a $2.7 million jackpot in statutory penalties because he inadvertently received – on a five-dollar disposable cell phone that he seldom used – emergency text alerts that the previous user of his cell phone number had requested,” AT&T’s attorneys wrote in November while asking for summary judgment.
“(Spencer) waited for the text alerts to accumulate, and then filed this lawsuit seeking millions of dollars unrelated to any alleged harm that he experienced.”
Later entries in the three-part series include part two, “the story of a Polish immigrant who has allegedly made more than $800,000 with a phone number belonging to his ex-wife,” and part three, on a defendant firm that struck back with racketeering suit against a prolific California attorney who has filed many TCPA claims. (earlier)
P.S. And related, just out today: junk-fax suits, covered here extensively in the past, “are active in industries that still rely on faxes for conducting business, such as hospitality and health care, a review of court filings shows. Recent lawsuits complain of unwanted faxes hawking medical supplies, pet medications, air conditioners and mortgage refinancing.” TCPA is nicknamed Total Cash for Plaintiffs’ Attorneys [Sara Randazzo, Wall Street Journal]
- Deferred prosecution agreements are a powerful new tool of the administrative state, with a tendency toward lawlessness [James Copland and Rafael Mangual, Manhattan Institute] Expected judicial deference to corporate prosecution deals: sign of a broken system [Scott Greenfield citing my April piece]
- Secrecy more common in criminal prosecutions: sealing of cases and documents, “gag orders… ex parte presentations, in camera submissions” [Tim Cushing, TechDirt]
- “In my heart, and in my approach to law, I saw rights as a challenge, as something to be overcome.” Confessions of an ex-prosecutor [Ken White (of Popehat), Reason] “Enforcement Gone Amok: The Many Faces of Over-Enforcement in the United States” [John Beisner et al, U.S. Chamber]
- Hunt County, Texas resident Kent Grady challenges county’s hiring of contingency-fee lawyers to go after him on environmental fines that via statutory per-day multiplication could turn a wrongly placed woodpile into a liability of $2 billion [WSJ editorial via Chamber Institute for Legal Reform]
- “Don’t Ask Us to Turn In Our Own Executives, Business Lobby Warns” [Bloomberg on Yates memo]
- “Scientists Looking To Fix The Many Problems With Forensic Evidence” [Tim Cushing, TechDirt]
It’s unclear whether the District of Columbia’s $300 penalty for affixing signs in public places is per offending sign or per offending course of conduct, which means that when Roger Horowitz and friends put up thousands of fliers about his lost dog Ollie, he might have been flirting with a very substantial liability; according to Horowitz, the sum of $750,000 came up in a conversation with a police officer. [NBC Washington] For more examples of how cumulative statutory damages or fines for individually paltry offenses can multiply into seemingly disproportionate outcomes, see also junk-fax and TCPA class actions.
Lawyers continue to craft class actions (here, here, etc.) demanding hundreds of millions or billions of dollars from businesses over what are often inadvertent or gray-area violations of the Telephone Consumer Protection Act, which bans unsolicited phone communication. Consumerist Ellen Taverna of NACA, the National Association of Consumer Advocates, finds talk of abuse “ridiculous” since at the same time phone users continue to report a large volume of (often patently unlawful and TCPA-flouting) call activity. Because how could there simultaneously be the one and the other? [Alison Frankel, Reuters] Unrelatedly, class actions over TCPA have found an especially ironic target: “The American Association of Justice, the national trade association that lobbies on behalf of plaintiffs’ lawyers seeking new ways to sue, itself got sued under the TCPA – by some of its own members. The AAJ was named in a class action lawsuit related to a blast fax sent to its members by a third-party vendor.” [Bryan Quigley, U.S. Chamber Institute for Legal Reform]
“The Buffalo Bills have agreed to pay up to $3 million – largely in the form of debit cards redeemable only at the team store – to settle a class-action lawsuit that accused the team of sending too many alerts to fans who signed up for a text-messaging service.” Plaintiff Jerry Wojcik contended “that the team violated the terms of its text service by sending him 13 messages over two weeks when it promised to send no more than five per week. … He claimed in his suit that the extra texts violated the federal Telephone Consumer Protection Act, and he sought statutory damages of $500 per excessive message for negligent violations and up to $1,500 per message for willful violations.” His lawyers will pocket $562,500. [Buffalo News]