Supreme Court Approves Class Action for Navy Recruitment Texts

A cell phoneHave you ever received a text message that advertises a product or service? Unless you expressly consented to receiving the text, the sender probably violated the Telephone Consumer Protection Act (TCPA) by sending it to you. That federal law prohibits using an automated dialing system to send text messages to cellular phones without the recipient's prior consent.

In a case involving unwanted Navy recruitment texts, a recent Supreme Court decision established two important principles. First, government contractors who violate the TCPA do not have immunity from suit simply because they are working for the government. The second, broader holding puts an end to a tactic that businesses have tried to use as a shield against class action lawsuits. Both holdings are good news for people who receive unwanted texts.

TCPA Violations

The United States Navy hired Campbell-Ewald Company, an advertising and marketing communications agency, to develop and implement a recruiting campaign. Campbell proposed to send text messages to young adults, encouraging them to learn more about the Navy. The Navy authorized Campbell to send the messages to recipients who had agreed to receive text-based marketing solicitations for topics that included service in the Navy.

In May 2006, Campbell sent text messages advertising careers in the Navy to 100,000 recipients, including Jose Gomez. While Campbell intended to target individuals between the ages of 18 and 24, Gomez was nearly 40.

Gomez sued Campbell, alleging that he did not consent to receiving such solicitations. He filed his complaint in federal court as a class action on behalf of all nationwide cellphone users who received Campbell's text message without giving prior consent to its transmission. The complaint requested damages as provided in the TCPA as well as an injunction against sending future text messages to cellphone users who did not agree to receive them.

Class Action Settlement Proposal

Class action lawsuits cannot proceed unless the court certifies that the case meets the requirements for a class action. Before the deadline arrived for Gomez to file a motion to certify his class action, Campbell filed an "offer of judgment." A federal procedural rule provides that if an offer of judgment is accepted, the case settles on the terms provided in the offer. If the offer of judgment is not accepted and the party to whom it was made recovers a judgment that is no more favorable than the offer, the party that declined the offer must pay the other party's litigation costs incurred after the date the offer was made.

Campbell's offer of judgment proposed to pay Gomez $1,503. The maximum remedy for a TCPA violation is $1,500 per message received, unless the recipient can prove actual harm in a greater amount. Gomez had no evidence that he suffered a costlier harm. Campbell also offered to be bound by the injunction requested in Gomez' complaint.

After the deadline for accepting the offer of judgment passed, Campbell asked the district court to dismiss Gomez' case. Campbell argued that Gomez had and lost his chance to settle on terms that were more favorable than any judgment he could hope to recover. Campbell argued that Gomez' failure to accept the offer rendered his lawsuit moot. Since the lawsuit had not been certified as a class action when the offer expired, Campbell argued that Gomez lost his right to proceed with the lawsuit by rejecting an offer that gave him all the relief to which he was individually entitled.

Immunity Claim Rejected

The federal government is generally immune from liability unless it has consented to being sued. Although Congress has enacted a number of statutes that allow certain kinds of lawsuits to be brought against the federal government, the TCPA does not contain a waiver of governmental immunity.

Campbell argued that it was entitled to immunity from suit because it was working for the Navy, which is part of the federal government. The district court agreed that Campbell was entitled to "derivative immunity" and dismissed Gomez' lawsuit.

The Supreme Court concluded that being under contract to the government does not automatically confer upon a contractor the same immunity that the government enjoys. A contractor might be entitled to derivative immunity when it performs tasks that are authorized and directed by the government. The Navy, however, authorized Campbell to send text messages only to cellphone users who agreed to receive them. The Navy's agreement with Campbell did not purport to authorize Campbell to violate the TCPA. Because Campbell exceeded its authority when it texted Gomez, it was not entitled to immunity from a TCPA lawsuit.

Rejecting an Offer of Judgment Does Not Render a Claim Moot

The Constitution permits federal courts to decide cases in which an actual controversy exists. The Supreme Court has held that when new circumstances deprive the plaintiff of a personal stake in the outcome of a trial, no controversy exists and the case must be dismissed as moot.

Campbell argued that Gomez had no further stake in the outcome of his trial after he was offered a settlement that would provide all the relief he could receive if he prevailed. Reasoning that an unaccepted offer does not affect the plaintiff's opportunity to win the lawsuit, the Supreme Court concluded that choosing not to accept the offer does not change a plaintiff's personal stake in the outcome. An unaccepted offer of judgment therefore does not moot a lawsuit, no matter how favorable its terms might be.

A Win For Consumers

By making the offer before the class was certified, Campbell hoped to thwart the class action lawsuit. Since the TCPA does not provide an award of attorney's fees if a plaintiff wins, most consumers who experience a TCPA violation are unable to find an attorney to handle their case. A maximum recovery of $1,500 would be dwarfed by an attorney's hourly rate, and a contingent fee would be too small to attract an attorney.

Class actions make it possible to obtain a large recovery for the class, which might include thousands of consumers. Class action lawsuits therefore make TCPA litigation viable for attorneys. The Supreme Court's ruling benefits consumers by depriving companies that violate a consumer's rights of a tool that they have used to avoid being held responsible for their misconduct in class action lawsuits.

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