Antitrust Law Daily Wrap Up, PRIVACY—NDCal: Consumer Consented to Receive Text Message; TCPA Claim Rejected, (Jun 3, 2013)

By John W. Arden, J.D., LL.M.

A Telephone Consumer Protection Act claim, based on PayPal’s sending of an unsolicited text message to a consumer’s cell phone, was rejected by the federal district court in San Francisco because the consumer had consented to receive text messages by providing his cell phone number on PayPal’s website (Roberts v. PayPal, Inc., May 30, 2013, Hamilton, P.). The district court granted PayPal’s motion for summary judgment.

David Roberts alleged that PayPal sent an unsolicited text message to his cell phone and brought an action for violation of the TCPA on behalf of a putative class of “all cellular telephone account holders owning a cellular telephone number to which a text message was sent advertising the commercial availability of PayPal’s property, goods, or services without the prior express invitation or permission to receive advertisements by text message.”

Background. Roberts had become a PayPal customer in September 2002 and agreed to PayPal’s user agreement, which did not include any reference to telephone calls placed by PayPal to its customers. Instead, the agreement stated that PayPal would contact customers only via email or postings on the PayPal website. However, the user agreement stated that it was “subject to change by PayPal without prior notice (unless prior notice is required by law) by posting of the revised agreement on the PayPal website.” Roberts accepted a revised agreement on May 3, 2003, which still did not make reference to phone contacts, but again allowed PayPal to amend the agreement by posting on its website.

On November 10, 2008, PayPal changed the terms of its user agreement, so that it could contact its customers by phone. The amended terms read:

Calls to You. By providing PayPal a telephone number (including a wireless/cellular telephone), you consent to receiving autodialed and prerecorded message calls from PayPal at that number.

Soon thereafter, Roberts accessed his account online and added his cell phone number. He later claimed that he did not read the revised user agreement. After providing the cell number, Roberts received a text message, welcoming him to learn about PayPal Mobile services, providing a means to stop notifications, and furnishing a method for seeking further information. This text message was the basis for Roberts’ lawsuit.

Motion for Summary Judgment

PayPal made a motion for summary judgment, based on two points: (1) Roberts had consented to receive text messages when he provided his cell phone number on the PayPal website and (2) Roberts had consented to receive text messages by accepting the user agreement.

Providing cell phone number. PayPal argued that Roberts consented to receive text messages simply by providing his cell number, noting that Congress had delegated to the Federal Communications Commission the authority to prescribe regulations to implement the TCPA and that FCC rules allowed persons who knowingly release their phone numbers to be called at that number. PayPal relied on Pinkard v. Wal-Mart Stores, Inc. (N.D. Ala., November 9, 2012), which held that a Wal-Mart pharmacy could sent text messages to a customer who provided a cell phone number when dropping off a prescription. The court noted that the TCPA did not define “express consent” but that a 1992 FCC report interpreted the term as encompassing “a situation where an individual voluntarily divulges her telephone number.”

The district court found the reasoning of Pinkard persuasive and adopted it. As in Pinkard, Roberts provided his cell phone number to the defendant and then received a text message from the defendant, rather than from a third party. The complained-of text message was closely related to the circumstances under which the plaintiff provided the cell phone number. Roberts provided his cell phone number in order to receive information about PayPal’s mobile services and then received a text message regarding PayPal’s mobile services. Even if the court were to construe the scope of plaintiff’s “prior express consent” narrowly, the text message at issue would fall within the scope of that consent.

User agreement. Because the district court found that Roberts had consented to receive text messages from PayPal by providing his cell phone number, the court declined to reach the merits of PayPal’s alternative argument that Roberts had consented to receive the text messages by agreeing to the PayPal user agreement.

The case is No. C 12-0622 PJH.

Attorneys: James Mark Moore (Spiro Moore LLP) for David Roberts. Joseph A. Escarez (Seyfarth Shaw LLP) for PayPal, Inc.

Companies: PayPal, Inc.

Cases: Advertising Privacy CaliforniaNews