So I was reviewing a $90+MM telecommunications services contract for a major brand yesterday.

$90MM folks.

The money in this industry is insane. But so are the stakes.

Fail to set up your system right and face a TCPA class action with damages that may dwarf an 8 figure contract.

Here’s a cautionary tale.

A company called YF FC Operations, LLC, dba YouFit was sued in a TCPA class action down in Florida by Jeniel Petrovich and Mauricio Cardero.

The essence of the allegations, apparently, was that YouFit failed to honor a DNC request received by YouFit via text message.

Not good.

But YouFit didn’t take the issue lying down.

Instead it sued its telecommunications provider– Vonage– for indemnity and professional negligence claiming that it was Vonage’s fault the stop notifications at issue in the underlying TCPA class action.

Per YouFit’s complaint:

On or around July 22, 2023, YouFit engaged Vonage to perform an integration of its systems with YouFit’s CRM provider Hubspot so that YouFit could communicate with its customers and potential customers using a short code (the “Integration”) rather than its toll-free number. The Integration was intended to monitor for the receipt of opt-out text messages from YouFit customers and, upon receipt of an opt-out text message, the customer’s request would be noted in Hubspot and further communication via text would end.

Because of Vonage’s actions, the opt-out messages of Petrovich and Cardero, and potentially thousands of other putative class members, were not recorded in Hubspot as was intended by the Integration. Subsequently, Vonage sent text messages potentially in violation of the TCPA and/or the FTSA. 

Now let me just say, I HATE the content of these paragraphs to the extent they essentially concede away critical issues in the TCPA suit.

Why would you admit that “potentially thousands” of individuals received illegal text messages? Literally no reason to do that. Allegations that if anybody received text messages–which should be denied– it was Vonage’s fault would have been sufficient.

But I digress.

The point is that YouFit went straight for the jugular here against Vonage. The Complaint goes on to allege that Vonage shirked its responsibilities to YouFit to defend the suit:

After the Class Action was served on YouFit, YouFit advised Vonage of the Class Action and requested that Vonage assist in the defense and resolution of the Class Action in light of Vonage’s actions. Vonage rejected the request.

Now I am going to guess that Vonage had a contract that disclaimed all liability here, so it will be very interesting to see how this plays out.

Complaint here: Vonage Removal

The bottom line is companies need to be working hand in glove with their telecom platforms to avoid this sort of thing and retaining knowledgeable counsel.

CRITICAL to keep in mind the following when setting up an outreach campaign and to EXPRESSLY set these items out in the MSA or IOs:

1. Which party is responsible for providing phone numbers to be called? Where will they be sourced from? What level of consent will be required? How will that consent be documented and stored?
2. Which party is responsible for supplying the DIDs (outpulse phone numbers)? How will they be provisioned? How long will they be kept? Is the use of local touch permitted in the jurisdiction to which calls are made? Who is responsible for assuring that?
3. Which party is responsible for ingesting, tracking and honoring revocation notifications? How broadly will those revocations be treated? How will multi-channel revocations be handeled?
4. Is the platform to be treated as an ATDS or regulated technology under the TCPA or state laws? If not, who has the risk associated with that assumption? If so, who has the responsibility to assure compliance with applicable consent rules?
5. Is AI to be used? If not, there should be a clear representation to that effect. If so, there should be a clear articulation of whose responsibility it is to assure training and accuracy of AI model, disclosure of AI usage, and properly documented consents and AI-specific opt outs.
6. Is telemarketing at issue here? If so, who has responsibility for TSR recordkeeping requirements?
7. Is outreach to be recorded or reviewed in real time either by the calling party or by any third-party vendor? If so a massive number of state level privacy laws may be triggered– particularly the anti-wiretapping statutes like the California Invasion of Privacy Act. CRITICAL to spot these issues and assign compliance responsibilities between the parties.

These are just a handful of the issues that need to be thought through in virtually any deal. If you’re not working with experienced counsel that knows how to work through these issues you could be in SERIOUS trouble.

Just ask YouFit.

And trust me, suing for indemnity after facing a potentially business-ending lawsuit is not where you want to be. Set expectations. Work with good partners. And, most importantly, work with good counsel. And you should be able to avoid these issues in the first place.