The Supreme Court to the Partial Rescue

April 21, 2021

- By Stephen M. Perry

Two years ago I wrote a column for the Bay State REALTOR® entitled “The Latest Class Action Craze.” The article discussed the spate of class actions that had been filed against real estate brokers and other businesses under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, for sending unwanted text messages.

At the time of my article, there was considerable uncertainty concerning the breadth of the TCPA. One of the TCPA’s provisions bans unsolicited calls and texts when they are made or sent by an “automatic dialing system” that can “store or produce telephone numbers to be called, using a random or sequential number generator.”  Most businesses do not randomly or sequentially generate the numbers that they are calling or texting. But some courts had held that the ban on unsolicited calls and texts applied to any device that could automatically dial from a list of stored numbers even if the numbers were not generated randomly or sequentially. This expanded view of automatic dialing systems could even include smartphones. I noted in the prior column that the issue of what constitutes an automatic dialing system might ultimately have to be resolved by the Supreme Court.

The Supreme Court has now spoken.  In Facebook, Inc. v. Duguid, issued on April 1, 2021, the Court unanimously rejected the overly broad interpretation of the TCPA that some courts had adopted. It held that only those devices that have the capacity to dial using a random or sequential number generator constitute an automatic dialing system for purposes of the TCPA. Although the Court did not explicitly say so, the logic of the Court’s opinion strongly suggests that for a text to be illegal under this portion of the TCPA, the text would have to be sent with the actual use of the device’s random or sequential number generator and not just from a device having the theoretical but unused capacity to generate numbers in such fashion. This is good news for marketers, and perhaps bad news for everyone who owns a cell phone.

Does this mean that real estate agents can now throw caution to the wind so long as their marketing campaign does not rely on a device that makes use of randomly or sequentially generated phone numbers? Definitely not. While the Facebook decision will take many unsolicited texts out of the TCPA’s ambit, and reduce the number of TCPA class actions, there are still some dangers lurking.

First and foremost, as the Supreme Court noted, the TCPA still generally prohibits unsolicited marketing calls to cell phones and home phones if the calls utilize a prerecorded or artificial voice message. Second, subject to certain exceptions for existing and recent customers, there can still be a liability for making calls or sending texts to phone numbers that are on the National Do Not Call Registry. There can also be a liability for calling or texting those who have previously asked that they not be further contacted, as each firm is supposed to maintain its own supplemental DNC list.

Real estate agents and their firms who ignore these prohibitions remain vulnerable. Just one week after the Supreme Court’s April 1, 2021, Facebook decision, class actions lawyers sued a real estate agent in Minnesota for allegedly violating the TCPA. The lawsuit alleged that over the past several years the defendant real estate agent had made numerous marketing calls that left a prerecorded message without the recipients’ consent and that she had also called and texted to phone numbers that were listed on the national DNC registry. The first sentence of the Minnesota Complaint seemed to be targeting the real estate industry, as it stated (without recognizing the specialized meaning of REALTOR®) that the suit was filed to address “a disturbing trend whereby REALTORS® cold-call consumers without consent violating the Telephone Consumer Protection Act.”

Despite that broad wording by the plaintiffs’ lawyers in question, this is not to say that all cold calls without consent are unlawful. But to stay out of trouble, real estate agents should refrain from marketing to residential or cell phones through the use of prerecorded voice messages. In addition, when live telemarketing calls are being made or when texting for marketing purposes, it is vital that the agents scrub the numbers that are being called or texted to ensure that they are not on the national DNC registry. There are exceptions to the DNC rule, however, if the call or text is to someone with whom there is an existing business relationship or one that ended in the previous 18 months.

Finally, each brokerage firm is also supposed to maintain its own internal DNC list, to supplement the national one. The internal list should include the numbers of anyone who has specifically opted out of receiving calls or texts from that firm or one of its agents. To assure compliance with TCPA, numbers being called or texted for marketing purposes should be scrubbed against this internal list as well.

While DNC list compliance remains necessary, there can be little doubt but that the Facebook decision has reduced some of the risk associated with marketing campaigns conducted by text. We can all expect to hear more pings in the months to come. But even members of Congress have phones, so don’t be surprised if the Court’s relaxing of the rules leads to some brand new legislation down the road.