Antitrust Law Daily Wrap Up, PRIVACY—DWash: Class Certified in Papa John’s Text Message Advertising Case, (Nov 14, 2012)

By William Zale, J.D.

In an action against pizza restaurant franchisor Papa Johns, some of its franchisees, and marketing company OnTime4U, for sending thousands of unsolicited text message advertisements in violation of the federal Telephone Consumer Protection Act (TCPA) and the Washington Consumer Protection Act, the federal district court in Seattle has granted class certification (Agne v. Papa John’s International, Inc., November 9, 2012, Coughenour, J.). The court certified a national class and a Washington sub-class of all persons who were sent, to their cellular telephone numbers, at least one unsolicited text message that marketed a Papa John’s branded product, good, or service through OnTime4U.

OnTime4U offered to increase the profits of Papa John’s restaurants by sending text message advertisements to their customers. OnTime4U apparently told Papa John’s franchisees that it was legal to send texts without express customer consent because there was an existing business relationship between the customers and the Papa John’s restaurants, according to the court. Certain Papa John’s franchisees, including at least some of the “Rain City Defendants,” provided OnTime4U with lists of telephone numbers of individuals who had purchased pizza from them. Those lists were generated out of the “PROFIT system,” a proprietary database that Papa John’s describes as a―point of sale data entry system. The PROFIT system is downloaded onto registers in Papa John’s restaurants and tracks customer and order information. OnTime4U removed landline numbers from the lists and sent text messages to the numbers associated with cell phones, the court said.

Named plaintiff Maria Agne allegedly received three messages sent by OnTime4U without having given any Papa John’s entity her express consent to send her text messages or make marketing calls to her cell phone. Other customers complained that they too received text message advertisements without having given their prior consent to Papa John’s or one of the franchisees.

Telephone Consumer Protection Act

The TCPA prohibits making “any call (other than a call made for emergency purposes or made with the prior express consent of the called party) . . . using any automatic telephone dialing system” to “any telephone number assigned . . . to a cellular telephone service,” 47 U.S.C. § 227(b)(1)(A). The Ninth Circuit has held that “a text message is a call within the meaning TCPA,” Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 952 (9th Cir. 2009). The TCPA establishes a private right of action for violations, and courts are authorized to award either actual damages or statutory damages of $500 per violation, 47 U.S.C. §227(b)(3).

Standing

While Agne had no Article III standing to sue franchisees with whom she has had no contact, she had standing to sue OnTime4U, the Rain City Defendants, and Papa John’s, the court determined. Contrary to Papa John’s argument, she asserted an injury traceable to Papa John’s and all of the Rain City Defendants. Every putative class member had standing to sue OnTime4U, the court found.

Papa John‘s argued that Agne did not have statutory standing to sue under the TCPA because she was not the primary account owner on her shared cellular plan and did not pay the bill. There was no dispute, however, that the messages were sent to Agne’s cellular telephone number and that she received them. Her privacy is the interest that the TCPA was intended to protect, and she therefore has statutory standing, the court held.

Ascertainability, Numerosity, Commonality, Typicality, Adequacy of Representation

The class definition provided sufficiently precise and objective criteria to determine class membership to make the class ascertainable, the court found. Numerosity was satisfied because there were hundreds or thousands of potential class members in this action making joinder impracticable.

Determining liability on the TCPA claims would require resolving numerous common questions of law and fact, including: (1) whether OnTime4U’s contention that buying a pizza is sufficient to establish a business relationship is valid as a matter of law; (2) whether an established business relationship is a defense to sending text messages to a cellular phone without express consent under the TCPA; (3) whether OnTime4U’s system of transmission qualifies as an “automatic telephone dialing system” under the TCPA; (4) whether Papa John’s controlled, participated in, or authorized OnTime4U’s text blast campaign; and (5) whether Papa John’s is vicariously liable for the acts of its franchisees.

Because Agne’s allegation was not merely that all class members suffered a violation of the TCPA, but rather that all class members were sent substantially similar unsolicited text messages by the same defendants, using the same automatic dialing technology, commonality was satisfied, according to the court. Typicality was satisfied because, like all class members’ claims, Agne’s claims arose from text marketing campaigns commissioned by Papa John’s franchisees and executed by the same marketing vendor—OnTime4U. Agne’s inability to prosecute all of the national class members‘ potential state law claims did not undermine her adequacy to represent those class members in their federal TCPA claims against Papa John’s and OnTime4U, the court added.

Predominance, Superiority, Due Process

The court rejected the legal foundation for Papa John’s argument that individualized issues regarding whether recipients were charged for the text message advertisements will overwhelm common questions. The court agreed with the careful statutory analysis of several federal district courts and their conclusions that the TCPA does not require plaintiffs to show that they were charged for text message advertisements sent to their cellular phones.

The court also rejected Papa John’s argument that a class action was not superior in light of the $500 statutory damages provision in the TCPA. Five hundred dollars is not sufficient to compensate the average consumer for the time and effort that would be involved in bringing a small claims action against a national corporation like Papa John’s, the court said. The Rain City Defendants’ contention that class adjudication would violate due process was without merit in light of the Ninth Circuit’s holding, in Bateman v. American Multi-Cinema, Inc., 623 F.3d 708 (9th Cir. 2010), that the size of a potential award of statutory damages is not a valid basis for refusing to certify a class action, the court concluded.

The case is No. 2:10-cv-01139-JCC.

Albert H. Kirby (Kirby Law Group) for Maria Agne. James E Howard (Dorsey & Whitney) for Papa John’s USA, Inc.

Cases: Advertising ConsumerProtection Privacy FranchisingDistribution StateUnfairTradePractices WashingtonNews