Court Allows Fraud Claim Against Repeat TCPA Player to Proceed For Failing to Opt-Out of Messages

In a new ruling released on Friday a magistrate judge in Texas has recommended allowing a fraud claim to proceed against a repeat TCPA Plaintiff who allegedly knew a third-party had provided his phone number and opted-in to a text message campaign. See Ricky Franklin v. Upland Software, Inc., Case No. 1-18-cv-00236, 2019 WL 433650 (W.D. Tx Feb. 1, 2019).  In Franklin, rather than opt out of the messages, the Plaintiff sat still and allowed the messages to continue. He then sent a demand letter to the Defendant in which he, apparently, misrepresented these facts and then filed suit.

Given that the Plaintiff was a repeat TCPA player, one could easily see how a court could conclude that he had invited the messages by failing to opt out after learning that a third-party had provided his number. (Wonder how he learned that? Hmmmm.) Indeed, the Court repeatedly noted that Plaintiff was “intimately familiar” with the statute. So this scenario seems to fit neatly within the rule of my old victory in Stoops v. Wells Fargo where it was first held that a TCPA plaintiff cannot welcome and invite their own harm and then turn around and sure for it.

But the Franklin Defendants went further than seek dismissal for lack of standing—they sued for fraud! Contending that Plaintiff’s superior knowledge of the situation coupled with his intimate familiarity with the TCPA created a duty to disclose, Defendant argued that sitting still and failing to opt out of the messages was actually a form of fraud by non-disclosure. The court agreed: “Upland alleges that it, and more importantly its third-party client, did indeed rely on the failure to disclose and continued to send text messages to the phone number at issue, as Upland took actions pursuant to its contractual obligations… Upland alleges that it was injured as a result of the nondisclosure and had to incur costs associated with what it views as a spurious and setup lawsuit.” So take note TCPAland— if a repeat Plaintiff allows messages to continue in a bid to set up a claim a fraud theory may be viable!

The Franklin magistrate judge also concluded that a direct claim for misrepresentation was possible under the facts alleged because the Plaintiff sent a demand letter to the Defendant misrepresenting that he had no knowledge of how the texter had obtained the number, a fact that was allegedly false.

The Franklin ruling is also spectacular for providers of texting technology more generally. As I reported a few months back, courts have slowly began creeping toward holding platform providers directly liable for texts sent by their users for some reason. But the Franklin ruling pushes back hard against that notion. On the Court’s review of the record: “ The process “to make” a call or send a text requires no involvement from [Defendant], but rather requires [Defendant’s] customer to log onto its platform and set up a mobile messaging campaign from a list of individuals who have opted into a messaging campaign.”  Based on these facts the Court had no problem finding that it was not the Defendant—but the user of the platform—that initiated the call. The Court also found that the Plaintiff’s claims that the Defendant was vicariously liable for the messages to be wholly unsubstantiated.

For good measure the Court blessed the Defendant’s software as outside the scope of the TCPA to begin with because if the high degree of human intervention associated with the text message campaign: “The process [requires a user to]… log onto its platform and set up a mobile messaging campaign from a list of individuals who have opted into a messaging campaign. After setting up the lists, the customer drafts the content of the text message and then selects the date and time the text message is to be sent, and, after reviewing the content of the message and time to be sent, sends or schedules the text to be sent. [Thus]…, the platforms require significant human intervention and sorting on almost all aspects of the text messages and the platforms do not have the capacity to act as an auto dialer.” Wow!

Great day for the Defendant in this one and a good lesson to all of us about thinking creatively and acting aggressively when defending TCPA suits against repeat players.

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Editor's Note: This article is published on insideARM with permission from the author.