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Telephone and Texting Compliance News: Litigation Update — FTSA Roundup: A Defendant-Friendly Start to 2024

FTSA Roundup: A Defendant-Friendly Start to 2024

The last month has brought several noteworthy decisions helpful for defendants facing class actions brought under the Florida Telephone Solicitation Act (FTSA). Issues include the enforcement of arbitration agreements, application of last year’s amendments to the FTSA in order to gut class allegations, and positive holdings on standing and the inability of a plaintiff to pursue statutory damages on a per-violation basis in state court.

Arbitration Agreement Tanks FTSA Class Action: Arbitration clauses and class action waivers can serve as powerful tools when defending TCPA and FTSA class actions. A recent FTSA case — Derriman v. Mizen & Main LLC — illustrates the point. The case stemmed from a visit to a website during which the plaintiff clicked a button that said, “GET 15% OFF NOW when you sign up for email and texts.”[1] The enrollment screen included a link to the terms of the offer above the sign-up button, and those terms included an arbitration clause. The plaintiff apparently completed the sign-up process through a pre-populated text message on his phone and filed the lawsuit after receiving a text message.[2]

At the outset, the court made swift work of the plaintiff’s waiver argument, concluding that the defendant did not waive its right to arbitrate by removing the case to federal court.[3] The court next concluded that the parties entered into a valid browsewrap agreement that contained the arbitration terms:

Given the specific placement, size, and conspicuousness of the link to the browsewrap agreement, and Plaintiff’s affirmative actions indicating assent to it, Plaintiff was put on inquiry notice…. Moreover, Plaintiff indicated his assent to the agreement twice — once by pressing a button, and again by sending a pre-populated text message…. [T]he Court finds that the Parties entered into a valid browsewrap agreement, and the arbitration clause within the terms of the agreement constitutes an enforceable agreement to arbitrate.[4]

Finally, the FTSA claim fell within the scope of the agreement to arbitrate, which referred to “all claims” “arising out of or in any way related to these Messaging Terms, or your receipt of text messages from Mizzen+Main….”[5] The decision highlights the importance of having appropriate agreements with arbitration and class action waiver language in place.

Application of FTSA Amendments Results in Remand: Plaintiff David Holton initiated a lawsuit against eXp Realty in Florida state court at the start of 2023, alleging that he received text messages in violation of the FTSA. The defendant removed the case to federal court, where the case trudged along until it was recently remanded as a result of amendments to the FTSA that went into effect in May 2023.

Ruling on the defendant’s motion for judgment on the pleadings or to strike class allegations, the US District Court for the Middle District of Florida explained:

The Florida legislature recently amended the Florida Telephone Solicitation Act (FTSA)…. [T]o state a claim under FTSA, as amended, a plaintiff must allege receiving at least one text message from an automated system within fifteen days after the plaintiff affirmatively replies “STOP” to an unsolicited message…. [T]he amended FTSA applies “to any suit filed on or after the effective date of this act and to any putative class action not certified on or before the effective date of this act.” The effective date of the amended FTSA is May 25, 2023.

The Florida legislature recently amended the Florida Telephone Solicitation Act (FTSA)…. [T]o state a claim under FTSA, as amended, a plaintiff must allege receiving at least one text message from an automated system within fifteen days after the plaintiff affirmatively replies “STOP” to an unsolicited message…. [T]he amended FTSA applies “to any suit filed on or after the effective date of this act and to any putative class action not certified on or before the effective date of this act.” The effective date of the amended FTSA is May 25, 2023.

Holton v. eXp Realty, LLC, No. 8:23-cv-734-SDM-AEP, Dkt. 52 (M.D. Fla. Dec. 28, 2023). The court’s application of those amendments was concise and logical.

The court noted that the plaintiff filed his case before May 25, 2023, and sued the defendant on his behalf and on behalf of a putative class described as “all persons within Florida who were sent more than one text message regarding Defendant’s property, goods, and/or services….” Absent from the complaint were allegations stating that the plaintiff or class members received messages after a “STOP” request. Because the plaintiff’s allegations did not comport with the amended FTSA, the claims were barred:

Holton fails to allege that he replied “STOP” to an unsolicited message. Holton fails to allege (and presumably cannot allege) that each member of his proposed class replied “STOP” to an unsolicited message. Holton’s proposed class fails the pleading requirements under the amended FTSA. Therefore, the amended FTSA bars Holton’s class action (absent “STOP” allegations) for the class and the class representative.

And contrary to the plaintiff’s position, the court held that there was “no vested and inviolable right to represent a class” here. Instead, “lawfully imposed requirements,” like the FTSA’s amendments, can limit who can represent a class, and what class they can represent. And with that, it struck the plaintiff’s class allegations and remanded the case to state court (since the removal was premised on satisfying the Class Action Fairness Act).

Florida State Court Denies Damages on Dual Grounds in FTSA Case: Positive developments haven’t been limited to federal courts as the Circuit Court of the Eleventh Judicial Circuit for Miami-Dade County recently issued two helpful orders in a case called Soto Leigue v. Everglades College Inc.

The first of those orders denied the plaintiff’s motion for class certification. Among the court’s holdings, it determined that the plaintiff lacked standing to bring FTSA claims based on Pet Supermarket, Inc. v. Eldridge, 360 So. 3d 1201 (Fla. 3d DCA 2023) (a decision we previously covered on this blog). The court reached this holding in the context of multiple text messages and denied the plaintiff’s argument that Eldridge should not be followed in light of standing developments within the United States Court of Appeals for the Eleventh Circuit.

In a second order, the court granted the defendant’s motion for summary judgment, holding that the plaintiff could not recover statutory damages under the FTSA. The court explained:

Under Fla. Stat. § 768.734(2), Plaintiff may not maintain a class action seeking a statutory penalty under the FTSA, which is in Chapter 501, where Plaintiff does not allege, nor prove, that Plaintiff suffered actual damages. Section 768.734(2) states as follows: “Notwithstanding any law to the contrary, in order to maintain a class action seeking statutory penalties under chapters…501….the class action claimants must allege and prove actual damages.”

Here, the court concluded, “Plaintiff has neither pled, nor created a triable issue of material fact, with respect to actual damages.”

The court further held that recoverability of $500 under the FTSA was not available on a per violation basis:

Defendant argues that the FTSA does not provide Plaintiff the ability to obtain multiple statutory penalties. Among other things, Defendant compares the FTSA with the federal Telephone Consumer Protection Act….The TCPA expressly provides to [sic] recovery of “actual monetary damages or up to $500 per violation.” The Florida Legislature, however, did not use that same language in the FTSA.

Basic principles of statutory construction hold that “[w]here the legislature has used a term in one section of a statute but omitted the term in another section, the court [may] not read the term into the sections where it was omitted.”…Accordingly, the Court grants judgment on the pleadings in favor of Defendant as to Plaintiff’s claim that Plaintiff is entitled to recover multiple statutory penalties.

Mintz will continue to keep readers abreast of more FTSA and other mini-TCPA developments throughout the year.

SCOTUS Won’t Take Up ATDS Issue

The US Supreme Court will not be revisiting what qualifies as an automatic telephone dialing system (ATDS) under the Telephone Consumer Protection Act, at least in the short term.

Back in April 2021, the Supreme Court issued Facebook v. Duguid, 141 S. Ct. 1163 (2020), a landmark TCPA opinion narrowing the types of technology that qualify as an ATDS. The Supreme Court explained: “Congress’ definition of an autodialer requires that in all cases, whether storing or producing numbers to be called, the equipment in question must use a random or sequential number generator.”[6]

Since then, the opinion has resulted in several other defendant-friendly rulings, including Borden v. eFinancial, LLC, 53 F.4th 1230 (9th Cir. 2022) and Trim v. Reward Zone, No. 22-55517, 2023 US App. LEXIS 20454 (9th Cir. Aug. 8, 2023). Consistent with Facebook, in Borden, the Ninth Circuit held: “The text and context of the statute make clear that an autodialer must be able to generate and dial random or sequential phone numbers, not just any number.”[7] Citing Borden, the Ninth Circuit reached the same conclusion in Trim: “Because Trim concedes that the subject dialing equipment did not generate telephone numbers using a random or sequential number generator, Reward Zone’s text messages were not sent via use of an autodialer in violation of the TCPA.”[8]

Following the ruling, Trim filed a petition for writ of certiorari, framing the issue as whether the “plain language of the Telephone Consumer Protection Act…and…Facebook, Inc. v. Duguid, 141 S. Ct. 1163 (2021), require a plaintiff to allege that telephone dialing equipment uses a number generator to generate the telephone numbers themselves, or does it merely require the use of a random or sequential number generator to store or produce telephone numbers to be called?” On January 16, the Supreme Court denied the petition, putting to rest the risk of the plaintiff’s bar undoing portions of Facebook and its progeny.

 

Endnotes

[1] Derriman v. Mizzen & Main LLC, No. 8:23-cv-1132-CEH-UAM, 2023 US Dist. LEXIS 230653, *2 (M.D. Fla. Dec. 29, 2023).
[2] Id. at *2-4.
[3] Id. at *13-14.
[4] Id. at *15-16.
[5] Id. at *23.
[6] Facebook v. Duguid, 141 S. Ct. 1163, 1170 (2020).
[7] Borden v. eFinancial, LLC, 53 F.4th 1230, 1234 (9th Cir. 2022).
[8] Trim v. Reward Zone, No. 22-55517, 2023 US App. LEXIS 20454, *2 (9th Cir. Aug. 8, 2023).

 

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Authors

Joshua Briones

Member / Managing Member, Los Angeles Office

Joshua Briones is a commercial litigator who defends consumer class actions for Mintz. He's represented clients in a wide range of industries, including financial services, life sciences, manufacturing, and retail, in cases involving false advertising, unfair trade practices, and other claims.
Esteban Morales is a Mintz litigator who handles class action defense and financial services litigation for companies of all sizes. He defends clients targeted in class action suits, and the results include dismissals at the pleading stage. Esteban practices in Mintz's Sports Law Practice.