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CATEGORY: PRODUCT LIABILITYBlog
Jun. 30, 2015
For several years, various manufacturers of laundry detergent and dishwashing detergent have begun making their products in “pod” form. These pods, which have been…
For several years, various manufacturers of laundry detergent and dishwashing detergent have begun making their products in “pod” form. These pods, which have been available only since 2010, are small, all-in-one detergent packets for washing machines and dishwashers. The pods are small, plastic-coated balls. The laundry pods are often made of detergent, bleach and/or fabric softener sealed in clear plastic wrap. The dishwasher version will generally contain dishwasher soap and quick dry agents. They are designed to be inserted whole into washing machines or dishwashers in lieu of separate liquids or powders, as is typically done. They are generally a little smaller than a golf ball, and, apparently for marketing reasons, they are brightly colored.
Risks for Children – Poisonous Laundry Pods
To some, especially small children, laundry detergent pods look like candy or teething toys, and looking at the photographs it is easy to see why:
A question that may come to mind for parents (and lawyers) reading this post is “won’t young children want to try eating them?” The unfortunate answer to that question is “yes.”
While not much literature is available regarding the dishwasher detergent pods, an article was recently published in Pediatrics, the Journal of the American Academy of Pediatrics, compiling data regarding poisoning from laundry detergent pods. (Abstract and link to full article available here: http://pediatrics.aappublications.org/content/early/2014/11/05/peds.2014-0057). The study compiled data from the National Poison Data System, finding that roughly 17,000 children over the past year alone have been poisoned by eating these laundry pods. The majority are small children, with 73% under the age of 3. The injuries caused by ingestion of the detergent pods varied, but a substantial number were significant:
- 4% (approximately 700) of the children were hospitalized
- 102 required tracheal intubation
- 1 confirmed death
The Pediatrics article is not the first press that these risks have received. Indeed, this issue has been repeatedly in the news since at least 2012. That said, this not a commonly reported or known hazard, and, more importantly, the packaging has not yet been changed.
Laundry Pod Lawsuits Possible
Although there are news reports of some recent lawsuits being filed, as of the writing of this post, there appear to be no reported legal decisions regarding liability for injury caused by ingestion of these laundry detergent pods. It would seem that, in the first instance, liability could generally be founded on products liability law or negligence. The manufacturers designed a product that is poisonous, yet very attractive to children. There would appear to be no reason that these products could not be dull gray or black or have an additive that makes them taste bad. To the extent foreseeability is part of the claim – either in a negligence analysis or a products liability claim – even if a reasonable manufacturer in 2010 could not have foreseen that children would eat the pods (a difficult argument in and of itself), there have now been thousands of reported cases, yet the packaging remains the same.
That said, any such claim would face significant challenges. In particular, any “failure to warn” claim would face preemption questions under the Federal Hazardous Substances Act (FHSA). The FHSA preempts some failure to warn claims where the packaging contains FHSA-approved warnings as to toxicity to children. Milanese v. Rust-Oleum Corp., 244 F.3d 104, 109 (2d Cir. 2001) (holding that the FHSA expressly preempts “any state cause of action that seeks to impose a labeling requirement different from the requirements found in the FHSA”). The FHSA generally defines a toxic substance as one that “which has the capacity to produce personal injury or illness to man through ingestion, inhalation, or absorption through any body surface.” 15 U.S.C. § 1261(g). Given that any claims based on injury from laundry detergent pods would necessarily be based on injuries caused by ingestion, the FHSA may define these pods as constituting or containing “hazardous substances.” A walk down a supermarket aisle reveals that the packaging on these products generally includes warnings to keep away from children and that the products can be toxic if ingested. As such, a laundry pod manufacturer would certainly contend that any claims related to the labelling (i.e., failure to warn claims) placed on the pods are preempted by the FHSA.
Even so, these preemption issues have not been litigated, at least not in any reported cases seen to date. Similarly, questions regarding defective design, negligence or other causes of action that may not be preempted also have not been tested in reported opinions. In view of this lack of legal precedent, one must look to the most important question: why do manufactures continue to make these products brightly colored and so visually appealing to young children? The obvious answer is that it is useful for marketing purposes, but if it serves no functional purpose, it would seem that the obvious risk to children should be preeminent. Further, if all manufacturers moved to dull colored packaging, there would be no marketing loss for any of them.
In the absence of regulatory change or successful lawsuits, however, this result is unlikely. Thus, the old adage “you never know unless you try” fits nicely here. Change will not come without effort, and given the optics of the colorful and enticing packaging, apparent purely profit-driven motives, and proven risks to young children, pressing the courts, regulatory agencies or legislators to confront whether this market-based packaging is worth the risk to young children would seem to be well worth the effort.
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CATEGORY: CONSUMER PROTECTION – GENERALBlog
Jun. 24, 2015
Congress is poised to interfere with the Federal Rules of Civil Procedure by reintroducing a bill that would return Rule 11 largely to its…
Congress is poised to interfere with the Federal Rules of Civil Procedure by reintroducing a bill that would return Rule 11 largely to its 1983 version. The 1983 version of Rule 11 was amended in 1993, in part, to allow litigants to “cure” a filing prior to the filing of a Rule 11 motion and provide district courts discretion regarding the imposition of an appropriate sanction under the circumstances.
The proposed Lawsuit Abuse Reduction Act (“LARA”) would remove the opportunity for litigants to cure a filing before facing a sanctions motion and strip away courts’ discretion to select the appropriate sanction for the circumstance. Sponsors of the House and Senate bills tout LARA’s benefits as deterring frivolous lawsuits, responding to the concerns of small businesses and responding to the desires of federal judges. Each is a myth.
What Is the Proposed Amendment?
LARA would amend Rule 11 to make sanctions mandatory, rather than discretionary. The current Rule 11 provides that “if . . . the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation.” That discretionary sanction “must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated,” and the sanction may consist of nonmonetary directives, a payment of a penalty to the court, or “if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of part or all of the reasonable attorney’s fees and other expenses directly resulting from the violation.”
The Advisory Committee Notes to the Rule make clear that courts are free to consider a variety of facts and circumstances when weighing a sanctions motion, including the willfulness of the improper conduct, past bad conduct, the intent of the bad actor and the deterrence interests at stake, just to name a few. In other words, the current Rule 11 provides courts the discretion to manage the cases assigned to them.
LARA ignores these important considerations and instead mandates a one-size-fits-all sanction. It replaces the word “may” with the word “shall.” And the bill requires that all Rule 11 sanctions “consist of an order to pay to the party or parties the amount of the reasonable expenses incurred as a result of the violation, including reasonable attorneys’ fees and costs. The court may also impose additional appropriate sanctions, such as . . . an order directing payment of a penalty into the court.” Finally, it deprives litigants the opportunity to consider withdrawing and/or correcting arguments the opposing party claims to be frivolous.
Legal Cases That Would Not Have Existed Under LARA
There are cases that might have been subject to mandatory sanctions, and thus not filed, had LARA existed.
The intent of LARA undoubtedly is to chill litigation brought by plaintiffs aggrieved by corporate or government misconduct, particularly in the areas of civil rights. Its passage would undoubtedly have that consequence – several recent First Amendment lawsuits might never have been filed had the plaintiff risked LARA’s mandatory sanctions:
Citizens United v Federal Election Commission, 130 S.Ct. 876 (2010): Citizens United, a nonprofit corporation, released a documentary critical of Senator Hillary Clinton at the time she was running for the democratic presidential nomination in 2008. The case presented the novel issue of whether corporations have First Amendment rights.
Rock for Life – UMBC v. Freeman Hrabowski, 2010 WL 5189456 (D. Md. Dec. 16, 2010): The University of Maryland’s speech code policy forced a pro-life student group to move its pro-life display to a desolate campus location because the display might “emotionally harass” students. The case presented the novel issue of religious discrimination against pro-life students.The University and the pro-life student group resolved the case after filing.
Parker v. Hurley, 474 F. Supp. 2d 261 (D. Mass. 2007): Parents of a Massachusetts elementary school student brought a constitutional challenge against the school district based on the use of books in the classroom portraying different types of families, including families of same-sex couples. The case presented the novel issue of whether parents have a right to notice and exempt their children from such school instruction. The case was dismissed and the Supreme Court denied plaintiff’s writ of certiorari.
Further, consider whether Brown v. Board of Education would have been subject to Rule 11 and its mandatory sanctions if LARA existed at the time. For nearly 60 years, racial segregation issues were controlled by the Supreme Court’s Plessy v. Ferguson “separate but equal” decision. The Brown plaintiffs challenged this precedent, seeking to have the Topeka, Kansas, Board of Education end its policy of racial segregation. The lower courts ruled against the plaintiff, relying on the Supreme Court precedent set forth in Plessy. A unanimous Supreme Court rejected separate but equal, at least as applied in education, holding that even if segregated schools were of equal quality, segregation in and of itself is a violation of the Fourteenth Amendment.
At the time Brown was filed, the legal theory being advanced was contrary to well-settled law. If LARA existed and the district court found plaintiff’s argument frivolous, mandatory sanctions would have issued. And while the Brown case undoubtedly would have been brought anyway, litigants wishing to bring about social change through the courts should not face mandatory sanctions.
Myths Surrounding the Need for LARA
As is so often the case, the myths surrounding the need for LARA abound.
Here are some of them:
Myth #1: The threat of lawsuits is a major concern of small businesses.
Debunking the myth: A 2012 National Federation of Independent Business survey of the greatest threats facing small business owners ranked the “costs and frequency of lawsuits/threatened lawsuits” as #71 out of 75 potential concerns.
Myth #2: Judges want to return to the 1983 version of Rule 11.
Debunking the myth: Most federal judges believe the current Rule 11 adequately addresses the purpose of forcing attorneys to “stop and think” before filing. Eighty percent of judges surveyed believe the current Rule 11 strikes the right balance. Eighty-seven percent of judges surveyed prefer the current Rule 11 over the 1983 version Rule 11 – the one that LARA would reenact.
Myth #3: Rule 11 is the only tool judges have to dismiss frivolous lawsuits.
Debunking the myth: Judges have many tools to dismiss frivolous cases, including motions brought pursuant to Rules 8 and 12. And the current version of Rule 11 provides a tool for Judges to sanction attorneys in appropriate circumstances.
Myth #4: Tort cases against businesses comprise a large percentage of the court docket.
Debunking the myth: Tort cases comprise a small percentage of cases brought against corporations. Businesses suing other businesses account for the vast majority of filed cases and verdict amounts. Further, cases for breach of contract, which are more likely to involve businesses than individuals, substantially outnumber tort cases. The National Law Journal reports that seven out of 10 cases filed are business versus business cases, and these cases account for more than $3 billion in verdicts. Tort case filings declined by 25 percent between 1999 and 2008; breach of contract filings increased by 63 percent over that same time period. The National Center for State Courts reports that tort cases comprise only 4.4 percent of the civil caseload.
Myth #5: LARA applies to demand letters.
Debunking the myth: LARA proponents suggest the bill would curtail the alleged practice of plaintiffs’ attorneys sending demand letters rather than filing suits to extract money from potential defendants. This argument is a red herring; Rule 11 only applies to court filings. Thus, Rule 11 sanctions would not apply to demand letters, whether sanctions are discretionary or mandatory.
In sum, LARA is no good for the civil justice system and it is justified on faulty premises that will discourage legitimate legal claims. Congress should let courts manage their own dockets and deal with frivolous filings using the tools that already adequately serve this purpose.
View Sources
- National Federation of Independent Business, 2012 Small Business Problems and Priorities http://www.nfib.com/portals/0/pdf/allusers/research/studies/small-business-problems-priorities-2012-nfib.pdf
- Federal Judicial Center, Report of a Survey of United States District Judges’ Experiences and Views Concerning Rule 11, at 2, https://bulk.resource.org/courts.gov/fjc/rule1105.pdf
- Top 100 Verdicts of 2006, National Law Journal http://www.takejusticeback.com/sites/default/files/AAJ%20Trial%20The%20web%20of%20tort%20%E2%80%98reform%E2%80%99.pdf
- Center for Justice & Democracy at New York Law School, Fact Sheet: Tort Litigation in the United States http://webcache.googleusercontent.com/search?q=cache:dtq7T00hyloJ:https://centerjd.org/content/fact-sheet-tort-litigation-united-states+&cd=1&hl=en&ct=clnk&gl=us
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CATEGORY: CONSUMER PROTECTION – GENERALBlog
Jun. 16, 2015
Environmental and Consumer Protection Unit filed a class action lawsuit against Chrysler Capital for violating New York’s usury statute.…
We are no longer accepting new cases.
UPDATE 7-30-2015: Attorneys in W&L’s Environmental and Consumer Protection Unit filed a class action lawsuit against Chrysler Capital for violating New York’s usury statute. The suit alleges that the dealerships are acting as agents for purposes of originating auto loans, making Chrysler Capital the real party in interest in the original finance contract. Therefore, the financing arrangement is a loan and subject to NY usury laws. If you are a victim of this usurious practice, please contact the firm. Read more about auto loans and usury laws below.
Aside from housing and food, automobiles are quite possibly the most important purchase that consumers make. Nearly 90 percent of the U.S. workforce commutes to work by car, and most car owners depend on auto loans to pay for the car they need to get there.
Car ownership affects where people can live and significantly expands job options; it is therefore a prerequisite to economic opportunity. According to the Center for Responsible Lending, “both the affordability and sustainability of auto financing are central concerns for most American families.”
Accordingly, vulnerable people with few options for auto financing — because of low incomes, poor credit, no credit history or other reasons — have essentially no bargaining power and are particularly susceptible to the whim and avarice of predatory lenders.
Interest Rates on Car Loans are Key
The interest rate is the key term in a loan because it largely determines the monthly payment amount and, subsequently, the car’s ultimate price. State usury laws regulate the maximum interest rate that lenders can charge to protect individual consumers and the broader community by regulating the amount of credit in the marketplace, lowering the default rate, and reducing economic hardship.
The maximum annual interest rates vary among the states. In New York and New Jersey, it is 16 percent; in Connecticut it is 12 percent. Although state usury laws have various exceptions (for example, nationally chartered banks are exempt), the dominant auto lenders are nonbank entities, including Ford Motor Credit, Chrysler Capital and Ally Financial. Therefore, usury laws should prevent auto lenders from abusing the most financially vulnerable among us.
Usury Laws Have Auto Loan Exceptions
In New York, the penalty for usury is severe. As applied to usurious auto loans, the lender must return all interest paid above the 16 percent legal rate, the borrower no longer has to make any payments, and, most importantly, the borrower gets to keep the car.
The billion-dollar auto finance industry, however, has long enjoyed two seeming exceptions to the usury laws. But these exceptions rest on fragile legal footing.
The first exception is that many courts recognize a distinction between loans of money and sales on credit. This distinction is important because usury laws typically apply only to loans or forbearances (agreeing to extend a loan deadline in exchange for interest).
The idea is that when a loan occurs, the borrower takes money in hand and agrees to pay it back later, with interest (i.e., money now for money later). But in a credit sale, the consumer obtains a product like a car and agrees to pay the purchase price over time, with interest (i.e., car now for money later).
The legal justification is that people are free to sell products at any price they choose and the price can be higher if payment is made over time instead of all at once. This is somewhat reasonable when the seller actually bears the risk of nonpayment, but auto sales operate differently.
In auto sales, a finance company typically approves the financing before the car is even sold, guaranteeing payment for the dealership. The dealership originates the financing by forwarding the prospective purchaser’s credit information to a finance company, or several of them. The dealership is a mere pass-through, and the finance companies dictate the loan terms.
Alternatively, consumers can apply for preapproval on finance companies’ websites before ever leaving home to go car shopping. Dealerships are under no obligation to secure the best deal for the purchaser and they often work to secure the best deal for themselves.
Many states, including New York, allow dealerships to secretly increase the interest rate to increase their profit. Finance companies usually limit this increase. Chrysler Capital, for example, allows a dealer to increase the rate by only 1.75 percent.
Usurious Interest Rates Charged by Auto Financing Companies
Even with these limitations, however, this system has led to discriminatory abuses by auto dealerships and finance companies that have charged a higher reserve to racial minorities. Indeed, Ally Financial recently settled a case under federal antidiscrimination law for $98 million.
To consummate the sale and financing transaction, the consumer and the dealership sign a “retail installment contract” under which the consumer owes monthly payments to the dealership, and the dealership immediately assigns this contract to the finance company.
This apparent two-step transaction is in substance an indirect loan. Instead of giving the purchase money directly to the buyer, the finance company gives the money to the dealership. The practical result is the same in this scenario as when a purchaser obtains a direct loan — the purchaser drives away with a car and must make monthly payments to pay off the loan.
One could argue that a direct loan is distinct because the proceeds could be used for any purpose. But, in reality, the direct lender would be likely to give the consumer a cashier’s check valid only to purchase a car.
When a finance company preapproves vehicle financing, guarantees payment to the dealership, and offers an interest rate above the legal limit, labeling the transaction as a credit sale is merely a smokescreen intended to conceal usurious loans. Thankfully, several courts have seen through the haze, including the Civil Court in Richmond and Kings Counties, New York and the Nebraska Supreme Court.
Car Sales Under Different Financing Rules
The second exception is that some states have different rules for automobile sales than for other types of sales. For example, under New York statute a “retail buyer” and “retail seller” of automobiles can “agree” to any finance charge (interest rate) that they please. But the N.Y. law protects only “retail sellers” of automobiles.
When the purchaser’s financing is preapproved by a finance company, the seller is merely a loan originator and the finance company is the real party in interest. Accordingly, N.Y. law should not protect finance companies that are obviously not retail sellers of automobiles.
For too long auto finance companies have structured their transactions with consumers and dealerships to conceal illegal, usurious loans. This abusive practice must be stopped for the benefit of individuals and the community at large.
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CATEGORY: ENVIRONMENTALBlog
Jun. 3, 2015
Train Derailments Involve Crude Oil and Explosive FiresLess than a week before the deadly Amtrak passenger train derailment in May 2015, six tank cars…
Train Derailments Involve Crude Oil and Explosive Fires
Less than a week before the deadly Amtrak passenger train derailment in May 2015, six tank cars of a freight train carrying crude oil derailed and exploded into flames in rural North Dakota. The derailed train burned for more than 24 hours and forced the evacuation of approximately 40 nearby residents.
In March 2015, almost a fifth of a train — 21 out of 105 cars — carrying Bakken formation crude oil left the track and caught fire in a rural area near Galena, Illinois. The tank cars temporarily survived the train derailment intact, but the heat built up so much pressure within them that they were ignited by a spark. The crude oil train blew up and became engulfed in a flaming pool of oil that leaked from damaged cars, sending giant fireballs hundreds of feet into the sky.
In February 2015, a 109 car freight train carrying 3.1 million gallons of crude oil from the Bakken Shale of North Dakota derailed in Powellton Hollow, West Virginia. Twenty-seven of the rail cars went off the tracks near the Kanawha River and 19 caught fire. The derailed train burned for days and forced the evacuation of more than 100 residents nearby. Some of the oil spilled into the river.
Threat of Future Train Derailments
Fortunately, no one died during these incidents. However, as we saw in the disaster of the oil train derailment in 2013 in Lac-Mégantic, Ontario, that is not always the case. In the Ontario derailment, 47 people were killed and more than 30 buildings were destroyed by the explosion and conflagration that ensued. These train wrecks can be lethal, and the damage to property and the environment can be expensive to clean up and repair.
Last July, a U.S. Department of Transportation report projected that during the next decade there would be an average of 10 derailments per year of crude oil trains. If the train derailment occurs in one of the densely populated cities through which these trains routinely travel, it could kill dozens if not hundreds of people and cost billions of dollars in property and environmental damage.
Dramatic Rise in Crude Oil Transportation
The volume of crude oil transported by rail has risen dramatically over the last decade, prompted mostly by the oil shale boom in North Dakota and Montana. Growth in transport of oil by rail has soared from the 9,500 railcar-loads shipped in 2008 to 500,000 carloads last year.
That means that about 10 percent of the oil moving through the United States is now carried by rail. This year, railways are expected to transport nearly 900,000 carloads of oil and ethanol in tankers, with each car holding 30,000 gallons of fuel.
“Soda Can” for Crude Oil Rail Tank Cars
One possible source of the incendiary rail disaster problem is that the majority of the oil is being transported in tens of thousands of DOT-111 tank cars. These are called “soda cans” by critics because they are susceptible to being easily punctured and crushed during a derailment.
Ominously, a 1991 National Transportation Safety Board report found that the DOT-111 tank car had a “design flaw that almost guarantees the car will tear open in an accident, potentially spilling cargo that could catch fire, explode or contaminate the environment.” However, despite knowing the danger, the agency did not mandate new tank cars with thicker and safer shells.
According to the NTSB, when a tank car is exposed to heat from a pool-type fire, the internal pressure increases, and the tank may rupture if a pressure relief device cannot sufficiently relieve internal pressure. The resulting tear in the shell releases built-up pressure, ejecting vapor and liquid which can ignite in a violent fireball.
New Federal Regulations
On May 1, 2015, the U.S. Department of Transportation (DOT) unveiled new regulations to enhance the safety of transporting oil by rail. Among other constraints, the regulations require that new and retrofitted tank cars must have thermal insulation and pressure relief valves to protect against heat and flames.
The regulations will phase out older model tank cars that have been deemed unsafe and replace them with a “new generation” of more robust cars, the DOT-117s, built to stronger specifications, including thicker steel shells.
Unfortunately though, the DOT retained a 20-year-old standard for the time duration during which a tank car should survive a pool-type fire. In addition, the new regulations do not focus on reducing the trapped volatile gases within the rail cars.
New Federal Regulations Criticized As Inadequate
Although the new rules are seemingly a move in the right direction, critics say they do not provide adequate protection against fire and heat, factors that cause rail cars to explode. Instead of imposing a tougher regulation, as some sought, the DOT kept in place the rule that tank cars must be able to survive being engulfed in a pool-type fire for a minimum of 100 minutes without failing.
However, according to experts, that older regulation was written for liquefied petroleum gas, not crude oil. In addition, this position ignored the 800-minute threshold recommendation of the Association of American Railroads, which represents the railroad industry.
Moreover, as fire fighters warn, if a fiery derailment were to occur in a densely populated area, it would challenge the combined manpower of several fire departments. More threshold time is necessary.
Some critics have argued that the new regulations focus too much on the long-overdue strengthening of tank cars that carry the oil.
In addition, they should focus on regulating the one thing that could immediately reduce the risk of a deadly disaster: reduction of volatile gases that the oil contains when it comes out of the ground, before the crude oil is loaded into rail tankers.
These gases include propane and butane. Thus, it’s no surprise that a spark can ignite these gases in the circumstances of a train derailment and punctured rail car.
No doubt because the oil industry profits from the sale of these gases, after the rail cars reach the end of the line, possible regulation was thwarted by stiff lobbying efforts by the industry.
Unfortunately, the new regulations do not appear to be adequate to reduce substantially or eliminate the risk of another Lac-Mégantic-type train disaster. Should injury to persons or property strike again in such a terrible manner, Weitz & Luxenberg has the knowledge, resources and skills to assist. Contact us so we can help.
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CATEGORY: CONSUMER PROTECTION – GENERALBlog
May 25, 2015
Robocalling, spam text messages, and spam faxes are common advertising and debt collection practices. But these practices are highly annoying, invade our privacy, shift…
Robocalling, spam text messages, and spam faxes are common advertising and debt collection practices. But these practices are highly annoying, invade our privacy, shift corporations’ cost of doing business onto the public, impose direct costs onto persons who are tricked into buying goods or services they do not want, and illegal. Spam wastes our time and invades our privacy. Some people’s text inboxes become so overloaded that they miss legitimate messages. Consumers pay for their home and cell phones. Pre-paid cell phone plans, often used by low-income individuals, typically charge fees for each text message received. Advertisers are therefore using consumers to subsidize their advertising costs. Spam faxes likewise shift printing and data transmission costs onto the recipients and cause legitimate, wanted faxes to be missed. Spam texts are like a trespass in that unwanted information takes up space on our phones. Consumers are unwittingly exposed to phishing and hacking schemes because one click can open a data “backdoor” in our cell phones. Clicking on a link in a spam text message may enroll a person in a service with recurring billing that is nearly impossible to get rid of—a practice called “cramming.”
Stopping Robocalls – Federal Fines on Spammers
Even members of Congress cannot avoid the ever-growing onslaught of unwanted communications. For that reason, in 1991, Congress passed the Telephone Consumer Protection Act (TCPA), a federal law with strong bipartisan support signed by President George H.W. Bush. Put simply, the TCPA prohibits unsolicited communications except for emergency purposes or from some non-profit entities. More, specifically:
- Home phones: it is illegal to use an artificial or prerecorded voice to deliver a message without the prior express consent of the called person.
- Cell phones: it is illegal to make any call or text message using an automated dialer or an artificial or prerecorded voice without the prior express consent of the called person.
- Faxes: it is illegal to send an unsolicited advertisement unless there is a prior established business relationship and the recipient voluntarily provided the fax number.
The TCPA imposes a penalty of $500 per call—not per person called, but per call. If someone received 10 unsolicited calls or text messages, that person would be entitled to $5,000. If the violation was willful—the company knew its conduct was illegal—the per call penalty is tripled to $1,500. The TCPA also established the widely popular Do Not Call Registry, with which over 220 million Americans have listed their phone numbers. Moreover, the TCPA prohibits calls before 8:00 a.m. and after 9:00 p.m.
Despite the steep penalties imposed by a law that has remained essentially unchanged for nearly 25 years and the public’s overwhelming rejection of invasive robocalls and spam texting, they are still commonplace. According to the New York Times, U.S. consumers receive approximately 4.5 billion spam texts per year. It is currently estimated that over one billion text messages are sent each day, and the AARP reports that 45 million of those may be spam text messages. In response, the Federal Communications Commission (FCC) has brought enforcement actions against repeat violators and private lawsuits have increased. In 2009, plaintiffs filed only 29 TCPA lawsuits, and that number grew to over 2,300 lawsuits in 2014. Some of the civil settlements have been massive, such as a $32 million settlement by Bank of America in September 2013. Yet it seems that spam texting is still profitable and corporations are willing to take the risk of being caught. In July 2014, Capital One and three affiliated debt collectors settled a TCPA lawsuit for $75 million.
Corporations Lobby to Protect Spam Text Messages
Because private lawsuits are such an effective way of curbing abusive corporate practices, corporations are fighting back by lobbying the FCC to implement new, lenient regulations. Corporations do not want to be responsible for mistakenly autodialing reassigned phone numbers, even though companies can use available technology to determine whether phone numbers have been transferred. For example, a company called Neustar asserts that it can determine 95% of reassigned numbers. Strict autodialing regulations are critical because an autodialer can send a text message to every conceivable telephone number in existence. Corporations are also seeking exceptions for healthcare-related calls that are not for solicitation. Even though these calls are not for sales purposes, there are serious privacy concerns because an unintended call recipient could obtain sensitive, private information about the intended recipient. Multiple consumer rights groups agree, including the National Consumer Law Center and the National Association of Consumer Advocates. They sent letters to the FCC in January 2015 and April 2015 to counter the industry push for lighter regulations.
Importantly, lawsuits are not intended to prevent consumers from receiving wanted information. There is no penalty if a company sends a text to someone who has consented to receiving text advertising from that company. The goal of TCPA lawsuits is to prevent companies from abusing the direct access that telephones—cell phones in particular—provide into consumers’ private lives. TCPA lawsuits are typically brought as class actions because, for an individual consumer, the expense of litigating against a large corporation typically far outweighs the potential recovery.
Filing a Lawsuit for Robocalls and Spam Text Messages
Weitz & Luxenberg is investigating potential claims of TCPA violations. If you have received any of the following, please contact us at 877-540-2553:
- an unsolicited or unwanted phone call, text message, or advertising fax;
- phone calls in spite of being on the Do Not Call Registry; or
- phone calls before 8:00 a.m. or after 9:00 p.m.
If you have received these unwanted communications, you may be entitled to monetary compensation and we may be able to help you.
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