How many times have I said it?

TCPA class litigation is not for the faint of heart, or the green of horn.

It is some of the most complex and dangerous litigation on the planet–with massive statutory damages and brand-reputation risk that transcends dollars on the line every time a TCPA defendant goes to the mat.

Plus the Plaintiff’s bar in this space–at least at the high end of the spectrum– is very very good. TCPA class litigation is a ~billion dollar a year industry. And there are monsters in these woods.

Sure, experienced defense counsel will win certification fights in TCPA cases more times than not (in some cases, many more times) but cases like Brown v. Directv,  Case No. CV 13-1170 DMG (Ex), 2021 U.S. Dist. LEXIS 231014 (C.D. Cal.  December 1, 2021) confirm just how dangerous the TCPAWorld really is. Especially when it comes to wrong number code class litigation.

Those of you that attended the Summit remember I gave this issue special attention (there’s a funny story here too–but if you missed the Summit you wouldn’t get it). Well, here’s why.

In Brown the Plaintiff used the Defendant’s own efforts to comply with the TCPA against it. In a bid to stop wrong number calls made by third-party debt collectors working on its behalf, DirecTV required its vendors to track wrong number calling. The vendors did so using data reflecting reports of wrong number notifications.

The Plaintiff demanded production of this data and identified approximately 180,000 calls to wrong numbers during an overly-long (more on that below) class period.

The Plaintiff moved to certify the case using the wrong number codes as a predicate for serving notice on a class consisting of non-customers that received calls from DirecTV’s collection vendors. It is very important to pay attention to the disconnect between the class definition and the data used to give notice to the class–this trick was made famous by Mike Greenwald, and it recently resulted in a massive class certification order against Snap Financial. 

Well the same trick worked against DirecTV as well.

In opposing certification DirecTV focused on gaps in the data–not on the lack of any evidence respecting the overall set of calls made to class members. The Court was unmoved and found that the data sets were sufficient to serve as a predicate for class notice and went so far as to grant summary judgment in favor of the Plaintiff concluding that DirecTV’s vendors did, in fact, make prerecorded collection calls to class members (i.e. non-customers).

Now the Court stopped short of tallying up how many such calls there were (thank goodness.) And here is some good news for DirecTV. Specifically, the court recognized that just because a wrong number code exists that does not mean that the called party was really a wrong number call recipient. And while that seems to spell doom for maintaining certification through trial, the Court expressed a willingness to turn to alternate data sources–like carrier data and self-identifying affidavits–to close the gap between data and “truth.”

Hmmmmm.

So DirecTV has lost the case to all class members. Its just a matter of identifying who those class members are.

No trial needed, apparently.

That means DirecTV faces ~$90MM in damages based on the whims of class members who return claim forms and/or carrier records. Every time I see one of these “let the administrator try the case” rulings–and they are mercifully rare– I can’t help but feel like due process and Article III protections are just being thrown out the window.

But, it happened.

On the plus side, however, the Court found that no evidence of willful violations existed. So..yay?

Moving on, the Court also found that DirecTV was DirecTLY liable–it seemed cleverer before I saw it typed out, but I’m still sticking with it– for the acts of its debt collectors.

As to the first party collector–who was collecting in DirecTV’s name–the Court had zero problem finding that DTV had granted apparent authority to the collector so as to form an agency relationship.

The analysis as to the outside collectors is a bit bizarre, however. The Court found an agency relationship existed based upon DirecTV’s control over the collectors. In analyzing the issue, however, the Court ignored the seminal Ninth Circuit case on the matter–Jones–holding that Jones applies only in the employment context.

Huh?

Dispatching with Jones and its magnificent 10-part test–one of the best parts of litigating in the Ninth Circuit, BTW–the Court looks to basic common law rules to determine that the ability to give “interim instructions” is all that is needed to establish agency.

Again, huh?

Well, stay with me.

The Court found agency existed because:

1. DirecTV could fire the collector’s managers at will (yeah, that’s a pretty powerful indication of control);

2. The collector had to get DirecTV’s permission before it could alter any script or template and to provide notice before changing any equipment (Courts often consider scripting as an element of control and dictating what tools a collector can use to perform their job starts to smell a bit like agency);

3. DirecTV set the threshold at which the collector could settle the debt (that’s just the collection business);

4. DirecTV audited and reviewed the collector’s work (can’t fault them for that);

5. DirecTV visited the collector’s sites to monitor performance (so did the Defendant in Jones with respect to its NON agents);

6.  “Perhaps most significantly, in December 2015, DirecTV gave the OCAs an interim instruction directly relevant to the issue in this case—it told them to stop autodialing cell phones—and they complied.”

Eesh, number 6 is just depressing.

The Court hung DirecTV with the autodialed calls of its outside collectors–at least in part– because it told them to stop autodialing people. Subsequent remedial measures anyone? (I know the doctrine doesn’t apply in this context–but it really should.)

Its simply ridiculous that a Defendant should be afraid to stop potentially violative calls by its vendors because doing so might result in liability for past calls. Terrible doctrine.

But I digress.

Having established an agency relationship existed the Court elected not to determine whether making prerecorded calls to wrong numbers was within the scope of that agency–it surely wasn’t–and proceeded to find that DirecTV ratified that conduct anyway.

The ratification finding was made under Henderson’s absurd unless-a-principal-is-absolutely-sure-that-a-call-is-legal-it-is-liable-if-the-call-is-illegal willful blindness test. That test–which basically turns the “knowledge” requirement for ratification on its head–states that a caller is liable for call if it knew that some calls might be illegal not–as common law requires–that the caller actually knew that each and every call is charged with was illegal and that it accepted the benefit anyway.

Regardless, the Court has little trouble finding that DirecTV’s conduct met the Henderson test because:

1. DirecTV knew that the OCAs were skip-tracing.

2. DirecTV knew that at least 10% of phone numbers for accounts in third-party collections were wrong.

3. DirecTV knew that the OCAs were coding calls as “wrong number”

4. DirecTV knew that the OCAs were making prerecorded calls.

Hmmm.

Curiously missing from this litany of knowledge is anything along the lines of “DirecTV knew prerecorded calls were being used to reach wrong numbers.”

Nonetheless, on this evidence the Court determined that DirecTV ratified all of the illegal calls until it fatefully instructed its vendors to stop making “autodialed” calls–which, BTW, is quite different than prerecorded calls it seems to me.

Bottom line: the Court found DirecTV liable for all calls to non-customers made by its collectors and just now needs to tally them up using some awkward administrator-based trial.

The Court did, however, limit the class period to four years of when DirecTV was actually added to the complaint–the case was originally filed against the wrong company apparently–and some calls will be removed owing to some settlement agreements entered into by DirectTV and its predecessors along the way.

So take aways:

1. TCPA wrong number code classes remain extremely dangerous;

2. Wrong number data is being relentlessly used against callers in TCPA class actions–think about what data you are keeping and how it is being tracked when it comes to wrong numbers;

3. In opposing certification you MUST keep in mind the difference between trying the case based upon codes and notifying the class based upon codes–and its weird to think that most Plaintiff’s class lawyers know exactly what I mean, while most Defense class lawyers don’t (but the good ones do);

4. In TCPAWorld, sometimes doing the right thing–like trying to shut down potentially illegal calls–will bite you;

5. Creditors can be liable for the acts of their collectors–especially in the first party setting, but even the acts of outside collectors may be attributable back to the creditor where too much control is exercised (especially if you have the right to fire managers of collectors);

6. Depending on the Court addressing the issue, agency may turn on nothing more than “interim instructions”–which is really weird (wrong?)–or a robust and well-refined ten-part test that the Ninth Circuit handed down in another TCPA case;

7. The Ninth Circuit’s ratification standard is ridiculously low–and totally inconsistent with the Restatement–but, so it goes;

8. I still think Kristensen–and not Henderson–should have applied to the third-party collectors because they were not purporting to be agents of DirecTV, but what do I know; and finally

9. Defending TCPA class actions is not for the faint of heart or the green of horn. It is for the extremely capable and extremely experienced. And no one else.

As Aaron said at the Summit: “There are two things you must always avoid. Gas station sushi. And low-priced TCPA lawyers.”*

Amen brother.

*Not saying DirectTV’s lawyers were low priced. I haven’t looked up who they were, and they may have cost a fortune (perhaps in more ways than one).