From the perspective of a litigator and trial lawyer, the online lead generation supply chain gives me heartburn sometimes.

The problem is one of evidence.  In the world of online lead generation and digital marketing, the end-user of a lead is sometimes three to four links in the chain removed from the lead’s origin.  And this distance presents some serious evidentiary challenges when trying to prove consent in a court of law in the event of a legal dispute over whether a call made by or on behalf of a lead buyer violated the TCPA. 

These concerns were recently put on display in the ruling granting class certification in McCurley v. Royal Seas Cruises, Inc., No. 17-CV-00986-BAS-AGS, 2019 WL 1383804 (S.D. Cal. Mar. 27, 2019).  The defendant Royal used a familiar model.  It had an arrangement with a company called Prospects DM to buy warm transfer leads.  Prospects would call leads it bought from a network of numerous other digital marketing companies, which in turn used thousands of different websites to generate leads.  Leads were generated through a website form which a user could fill out and check a box providing their consent to receive promotional calls.  Prospects would then call the telephone numbers generated from those websites, and in the event the call recipient expressed interest, Prospect would warm transfer the call to Royal.

In 2017, a team of some well-known TCPA class action lawyers filed a nationwide class action against Royal in California for violating the TCPA.  The Plaintiffs in the case alleged that they’d received calls from Prospect on behalf of Royal using an ATDS without their consent.  Plaintiffs eventually moved for certification of a class consisting of everyone in the country who received a call from Prospect on behalf of Royal on their cell phone with an ATDS between November 2016 and December of 2017. 

Just a few days ago, the court granted the Plaintiffs’ certification motion.  Although the court’s 30-plus page ruling covers a gamut of TCPA and class action legal issues, the ruling really boiled down to—as it does with most of TCPA class actions—whether individualized issues of consent predominated over other issues that could be determined on a classwide basis.

Past cases have shown that robust evidence of consent can be a very potent tool in defeating certification.  According to the court in Royal, the issue comes down to a fact-intensive question that must be determined  “on a case-by-case basis after evaluating the specific evidence available to prove consent.”  But notably, even if the defendant is able to provide evidence of classwide consent, that issue could still be susceptible to classwide resolution if consent “was obtained in an identical or substantially similar manner from class members.”  In the best case, the defendant will be able to show “prior express consent was provided in a variety of contexts and, as such, would likely require highly individualized inquiries.” 

Under this standard, the court found that Prospect hadn’t provided enough evidence to demonstrate the predominance of individualized issues of consent across the class.  Royal’s evidence in the case consisted of a serious of declarations from persons involved in the marketing and lead generation process at Royal, at Prospect, and at one of the digital marketing companies used by Prospect.  The problem was, however, that each of these declarations talked about the lead generation process in abstract, and per the court, the “fundamental problem with the information provided by these individuals is that none of them has personal knowledge of whether Plaintiffs or any class member actually visited and completed the forms available at the two websites which Royal contends are the lead generation sources for the cell phone numbers of the class members.” 

A basic visual of the lead supply chain is helpful in illustrating the court’s concerns:

Royal → Prosper → Digital Marketing Company → Website Where Lead Was Generated

The court’s ruling shows is it was expecting, at minimum, someone with personal knowledge of what happened all the way down at the end of the chain when the lead was generated on the website to tell the court exactly what the consumer would have done in providing their consent to receive promotional calls by or on behalf of Royal.  Of note, the court also pointed out the absence of “a single affidavit from a proposed class member who expressly attests that he or she opted to receive calls for Royal’s services through the lead generation program.”  And whichever way you slice it, the higher level officers, marketing directors and the like involved in the lead supply chain were, unfortunately, too far removed from the lead’s point of origin to give evidence that some or most of the proposed class members had consented to receive calls.

What was particularly problematic for Royal, however, was the court went on to find that regardless of this evidentiary shortfall that consent could still be resolved on a classwide basis for three reasons:

1. Plaintiffs presented evidence that on one of the two websites were leads were generated, Royal was not included on the list of businesses the consumer had consented to receive calls from, and therefore “even assuming the form obtains consent for the companies identified, the form would not establish consent for . . . any class member for which this website generated a lead.”

2. The theory of consent are “classwide” in nature because they involved a common procedure for generating leads and calling consumers.

3. Plaintiffs presented evidence attacking the validity of consent across the class on the basis that leads were “manufactured” because the website traffic data for those website was a fraction of the number of leads that Royal said had been generated from that website.

Hence, not only was the evidence of class consent lacking, but Plaintiffs were able to come up with their own evidence and own theories of attacking the validity or existence of that consent on a classwide basis. 

There’s a lot of lessons here for lead buyers, and anyone else who is calling consumers based upon consent they obtained from a third party lead generator.  Here are the top three takeaways from our perspective:

• Vet your leads. Know what you’re buying, know exactly where it’s coming from, and how those leads are generated, so that you can confirm for yourself that you have the necessary consent to call.  Verify the fidelity and integrity of the lead data you’re relying on to avoid sticking your neck under the TCPA guillotine. 

• Be able to draw a straight line from you down to the origin of the lead so that, in the event of a legal dispute you’re able to harness the necessary evidence to show that consent flowed back up to you from the lead’s point of origin.

• Take TCPA compliance seriously and ensure your partners do too so that, in the event of a dispute, you have the resources at your disposal to get yourself out of harm’s way.

• Don’t wait. If you’re taking a look at your own lead supply chain, and noticing some of the same problems, don’t wait for a class action to land in your lap to take action.  Take proactive measures, including the retention of knowledgeable outside counsel, to troubleshoot those issues and build a better foundation for establishing consent in the event of a legal dispute.