May 21, 2015

tcpa-subpoenaThe number of Telephone Consumer Protection Act (“TCPA”) class action lawsuits has grown significantly recently, with several thousand cases filed in each of the past several years. Typically, TCPA actions are brought against businesses which contact customers or potential customers via text, telephone or facsimile (“Advertisers”), or against companies that send the text messages, telephone calls or facsimiles on their behalf (“Marketers”). However, lead generators are also frequently involved in TCPA cases. Often lead generators are brought into TCPA cases through the contractual indemnity claim process. Much more often, however, lead generators are served with subpoenas for documents and/or testimony (where they are not named defendants), particularly regarding the issue of whether and how express written consent was obtained from the subject plaintiff. The manner in which the lead generator initially responds to a TCPA subpoena can make a huge difference in determining how time consuming and costly its participation in the applicable action will be and, more significantly, whether it will be added as a party to the lawsuit.

What is the TCPA?

The TCPA was enacted in 1991 and, with some exceptions, allows individuals to file lawsuits (including class actions) to collect damages based upon receipt of certain (SMS) text messages, telemarketing calls, faxes, pre-recorded telephone calls and/or autodialed telephone calls.

The TCPA allows for actual damages, or statutory damages ranging from $500.00 to $1,500.00, per unsolicited call/text message or facsimile transmission. In light of the exacting standards and exceedingly high statutory penalties, the TCPA continues to be one of the most active areas of class action litigation in the country. The October 16, 2013 amendments, together with the overly-expansive interpretation of the TCPA given to it by the Federal Communications Commission (“FCC”) and some courts, has further motivated TCPA class action plaintiffs.

What Should Lead Generators do Upon Receipt of a TCPA Subpoena?

First, lead generators should be working on TCPA compliance with experienced TCPA counsel long before they ever receive a TCPA subpoena. TCPA lawsuits are preventable and so are many of the mistakes that companies make in responding to TCPA subpoenas that ultimately result in the subject companies being added as defendants in TCPA actions. The TCPA has some bright line rules that must be followed in obtaining express written consent, however many provisions are more nuanced. Lead generators cannot comply with the TCPA by simply applying common sense, a cursory review of the statute itself, or copying what their peers are doing. TCPA compliance requires knowledge of the statute itself, constantly developing caselaw on the topic, as well as FCC interpretations thereof. Mere technical non-compliance with the TCPA alone has resulted in multi-million dollar judgments against, and settlements by, many companies. Ultimately, the penalty for paying for the defense of class action litigation, and the associated monetary penalty, may be passed down the lead generation chain.

Second, lead generators should be working with counsel to get ironclad contracts in place long before they receive a TCPA subpoena. This includes not only the lead generator that originally obtained the lead but also affiliate networks, lead brokers and any other entity along the lead generation path. The contracts with both the entity from which lead generators obtain the lead, as well as the company(ies) to which they provide the lead must expressly mandate that it/they are fully TCPA compliant. In addition, the contracts with the entity from which leads are obtained must have a clear and enforceable indemnity agreement protecting the lead buyer in case a TCPA action does go wrong and the advertiser, marketer, affiliate network, etc. is looking for indemnity. Upstream indemnity contracts must also be reviewed for reasonableness and to provide lead generators with maximum protection.

Third, when lead generators actually receive a TCPA subpoena, they should not speak to anyone other than their attorneys.  Most importantly, the party that sent the subpoena should not be called. Business practices that the lead generator believes to be proper, and that many of lead generator peers engage in, may in fact be the basis of the plaintiff’s claim. Discussing the lead generator’s business practices with its adversary may simply confirm plaintiff’s case and serve as a clear admission of wrongdoing.

Fourth, lead generators should not speak with employees, marketing partners, advertisers or other industry contacts until after they have spoken with their attorneys. Information discussed or shared with any of the above may be discoverable by plaintiff and may ultimately complicate their subpoena response, make the response more time consuming and expensive, and potentially result in the lead generator being added as a defendant to the subject action. In fact, some of the above individuals and/or entities may have previously agreed to work with plaintiff to avoid being named as a party to the lawsuit.

Fifth, documents should not be created/destroyed.   Document tampering or spoliation will generally be uncovered during the discovery portion of the action. Such activities may create a basis for very costly sanctions against the lead generator and needlessly complicate matters.

Sixth, lead generators should discuss strategy and defenses with their attorneys.   Is the subpoena even valid? Was it issued through the proper court, served properly, or does it request an appearance outside the relevant territorial limit?  Is it overbroad in scope, does it request documents outside the lead generator’s control or other objectionable matters?

Finally, lead generators should look hard at their contracts. Discuss with counsel what indemnity rights there are and how business relationships may be affected. If the lead generator has obtained good, TCPA compliant express written consent, the parties may want to fast track that information to plaintiff without the need to raise and litigate indemnity claims. Conversely, if the case proceeds, each party may wish to look downstream to the party that provided it with the lead to cover its legal costs.

If you are a lead generator and not currently working with experienced telemarketing and Internet marketing counsel versed in the intricacies and nuances of the TCPA, you are almost certainly at risk. Moreover, in-house (as well as corporate) counsel should honestly assess how familiar they are with the TCPA and whether consulting with counsel experienced in TCPA compliance best serves and protects their interests. Proper compliance is the only sure fire way to succeed in a TCPA lawsuit.

This topic should be of interest to any company or individual engaging in online lead generation and telemarketing.

If you are interested in ensuring that you are compliant with current TCPA regulations, or if you are facing TCPA class action litigation or other regulatory complaint, please e-mail us at, or call us at (212) 246-0900.

The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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Related Blog Posts:

How to Defend a TCPA Lawsuit

Help! I Was Named Personally in a TCPA Lawsuit

Protect Yourself Against Personal Liability Under the TCPA

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