On the panel in which I participated during last week’s PLUS D&O Symposium, one of the important topics we discussed was the question of coverage under a D&O insurance policy for claims under the Telephone Consumer Protection Act, a topic about which I have previously written on this blog. That a once-obscure statute like the TCPA has become an important topic of conversation is no accident. The fact is that the number of TCPA actions filed has absolutely exploded, as detailed in a recent study published by the Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce.
According to a February 5, 2016 post on the ILR’s website, the number of TCPA actions filed in 2015 was nearly double the number filed in 2013, and exponentially greater than the number filed in 2007. While there were only 14 TCPA actions filed in 2007, there were 1,910 TCPA actions filed in 2013, and an “astounding” 3,710 in 2015. In other words, there were 265 times more TCPA lawsuits filed in 2015 as there were just eight years before.
Why are the number of TCPA lawsuits taking off so rapidly now? According to a recent paper (here), part of the reason is that the now 25 year-old statute was written before the advent of much of today’s technology, and that inventive plaintiffs’ lawyers have crafted “novel legal theories under which to sue companies that are communicating with consumers in ways that were not invented” when the statute was enacted. These new communications technologies allow consumers to be reached in much greater numbers than was possible under prior technologies. The statute’s prescribed damages measure – which allows for damages of $500 per violation, to be trebled to $1,500 for willful violations of the statute, with no maximum recovery – permits aggregate damages in class-wide claims to quickly reach astronomical numbers.
As a result, there have been multiple recent TCPA settlements in the tens of millions of dollars range. These mega settlements, in turn, encourage the filing of further TCPA lawsuits.
The defense bar had hoped that they might be able to use the “pick-off” defense, by which the named plaintiff would be offered the full amount of recovery to which he or she was entitled under the statute, in the hope of being able to argue that, having realized the full amount of recovery that he or she could hope to achieve in the lawsuit, the individual TCPA claimant could no longer demonstrate an injury sufficient to support standing to assert a claim.
As I discussed here, the U.S. Supreme Court recently shot down the “pick-off” defense, at least where the amount of the settlement that had been proffered to the claimant had not been deposited in escrow or in the registry of the Court. However, the Court left open the question of what the outcome might have been if the funds had been deposited in escrow or into the registry of the court. There may well be a case before the Supreme Court in the next several years in which the question of the claimant’s standing is addressed in the circumstances where the settlement amount has been escrowed or deposited.
In addition, as also discussed in the recent post, another case that remains pending with the U.S. Supreme Court and that likely will be decided this term may also address an important defense to TCPA claims. As discussed here, in the Spokeo case, the Court must consider whether Congress may confer Article III standing on a plaintiff who had suffered no concrete injury but who alleges a violation of a federal statute.
Although the claimant in the Spokeo case is asserting claims under the Fair Credit Reporting Act rather than the TCPA, the argument Spokeo has raised would be equally applicable to claims under the TCPA. That is, the defendant argues that where the claimant is not asserting injury in fact but instead is seeking only the statutorily prescribed damages in the absence of any real injury in fact, the claimant lack standing sufficient to present a justiciable controversy.
Basically, the question in Spokeo is whether or not Congress can provide standing by statute. If the defendant prevails in the Spokeo case, the TCPA claim defendants may well have a potent standing defense, at least in those cases where the claimant has not asserted an injury in fact.
In the meantime, while these important issues are being sorted out at the U.S. Supreme Court, plaintiffs continue to file TCPA lawsuits, in massive numbers, as the recent ILR article substantiates. To the extent these lawsuits continue to accumulate, we can expect the TCPA to become an increasingly important topic of discussion. The continuing conversation will undoubtedly include questions of insurance coverage, including questions of coverage under D&O insurance policies.