Class Actions

The Role Record-Keeping May Play In TCPA Class Cert.

The Role Record-Keeping May Play In TCPA Class Cert.

Two recent decisions highlight that the viability of the established business relationship, or EBR, exemption defeating class certification in a Telephone Consumer Protection Act case may depend on the defendant company’s record-keeping and policies.

The EBR Exemption Explained

The EBR is one of the limited exemptions to liability under the TCPA when an individual has otherwise “received more than one telephone call within any 12-month period or by or on behalf of the same entity in violation of the regulations prescribed under [the TCPA].”[1]

An EBR is defined as:

a prior or existing relationship formed by a voluntary two-way communication between a person or entity and a residential subscriber with or without an exchange of consideration, on the basis of the subscriber’s purchase or transaction with the entity within the eighteen (18) months immediately preceding the date of the telephone call or on the basis of the subscriber’s inquiry or application regarding products or services offered by the entity within the three months immediately preceding the date of the call, which relationship has not been previously terminated by either party.[2]

The defendant asserting this defense has the burden proving the existence of the EBR.

The EBR Defense at Class Certification

Defendants often argue the EBR as a complete bar to liability under the TCPA based on a relationship with the named plaintiff. And when the case is brought as a class action, defendants will often argue that individual inquiries into whether there was an EBR with each putative class member defeats class certification.

This sentiment was recently approved by one district court in Sorsby v. TruGreen Limited Partnership,[3] in which the U.S. District Court for the Northern District of Illinois granted a TCPA defendant’s motion to strike class allegations.

There, the plaintiff alleged that after she canceled her lawn care service and told the defendant not to call her, she received numerous calls from the defendant to a number that was on the National Do Not Call Registry in violation of the TCPA.

TruGreen moved to strike the class allegations, arguing that the plaintiff could not satisfy the requirements in Rule 23 of the Federal Rules of Civil Procedure.

The district court agreed in January, finding that the TCPA does not prohibit solicitations to customers with whom a business has an EBR. And although the named plaintiff claimed to have terminated her own EBR, the availability of the EBR defense as to other class members was inherently individualized and not capable of being determined on a classwide basis.

In considering Rule 23’s predominance, the court found that because there was “no single source of information that would demonstrate whether all class members had successfully terminated their business relationship”[4] a determination of the availability of the EBR defense would therefore “require individualized inquiries” not suitable for class treatment.

By contrast, in Williams v. The PISA Group Inc.[5] in February, the U.S. District Court for the Eastern District of Pennsylvania found that the “single source of information” was available, and the class was certified.

In Williams, the plaintiff alleged that after she canceled her newspaper subscription, PGI called her cellphone at least 12 times without her consent more than 18 months after her subscription ended.

Like TruGreen, PGI argued, in an effort to defeat class certification, that individualized inquiry will be necessary to establish the EBR defense with respect to each putative class member.

The district court disagreed. In contrast to TruGreen, the evidence established that PGI maintained a customer relationship management database to track phone numbers with which it claims to have an EBR. And PGI did not use or consider prior express consent when determining whether it could legally make telephone calls to individuals on the National Do Not Call Registry and instead made such calls only when PGI believed it had an EBR with an individual.

Thus, the resolution of whether there was an EBR turned on the interpretation of the same data: PGI’s own call records and PGI’s customer relationship management data. As a result, because there was a single source of information, the EBR defense was not sufficient to overcome Rule 23’s predominance inquiry.

Other earlier courts have certified a TCPA class in the face of the EBR defense when there was a single source of information.

For example, in Advanced Rehab and Medical PC v. Amedisys Holding LLC[6] in August 2019, the U.S. District Court for the Western District of Tennessee granted class certification. There, the defendant argued that its EBR defense and defense of prior express permission required individualized inquiry as to all members of the class and would make a single trial unwieldy.

The court disagreed, primarily because the defendant asserted that it had a procedure for obtaining the fax numbers to which it sends its fax advertisements, and it compiles a list of those customers who have expressly consented to receive faxes.

Thus, because there was a well-documented list from which the defendant intended to establish the defense, the court found it would not be an overwhelmingly difficult task to identify which class members are subject to this defense.

Good Record-Keeping Is Essential

Despite these decisions, record-keeping is essential to establish the EBR defense.

For example, a summary judgment was granted by the U.S. District Court for the District of New Jersey in Rowan v. US Dealer Services Inc.[7] in July 2022 based on the records of the defendant and the EBR defense.

There, the plaintiff alleged that after he canceled his vehicle service agreement, the defendant called him five times despite his telephone number being listed on the National Do Not Call Registry. Specifically, the plaintiff argued that his cancelation of the agreement terminated his EBR, and therefore he wasn’t exempt.

In granting a summary judgment, the court found that the termination of the commercial relationship was not sufficient to terminate the EBR and cut off the otherwise applicable 18-month deadline for calls. Importantly, the policy cancelation letter from the plaintiff did not explicitly request that defendant stop calling him.

What these recent cases demonstrate is that the viability of the EBR defense in defeating class certification may depend on the status of a company’s records and policies.

Companies that maintain accurate records regarding their current customers or people with an EBR may be penalized in trying to defeat class certification on the basis of an EBR defense because their own record-keeping will likely be viewed as common evidence that can be used to tailor the class definition accordingly. Individualized issues, such as whether there was an EBR, can be answered easily based on the company’s own records.  

Nevertheless, a company should continue to maintain records so that it can still meet its burden in establishing defenses to the primary claim asserted by the plaintiff or to narrow the class and exclude those putative class members with whom there was an EBR.

Good record-keeping may not defeat class certification, but it can ultimately help defend against the merits of the case where the defendant company otherwise complied with the TCPA.

This article first appeared in Law360 on April 27, 2023, and is republished here with permission from the publication.

[1] 47 U.S.C. § 227(c)(5); 47 C.F.R. § 64.1200(f)(15).

[2] 47 C.F.R. § 64.1200(f)(5).

[3] No. 20-cv-2601, 2023 WL 130505 (N.D. Ill. Jan. 9, 2023).

[4] Id. at *6.

[5] No. 18-4752, 2023 WL 2227697 (E.D. Pa. Feb. 24, 2023).

[6] No. 1:17-cv-01149-JDB, 2019 WL 4145239 (W.D. Tenn. Aug. 30, 2019).

[7] No. 21-09945 (KM)(LDW), 2022 WL 2803103 (D.N.J. July 18, 2022).