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On November 13, 2017, the U.S. Supreme Court declined to hear the appeal of one of 2017’s more significant Fair Credit Reporting Act (FCRA) opinions, Syed v. M-I, LLC. (9th Cir. Jan. 20, 2017).  In Syed, the Ninth Circuit Court of Appeals held that a background check disclosure which included a liability waiver violated the FCRA. This case was significant because the Ninth Circuit is the first federal appeals court to definitively state that the FCRA “unambiguously bars the inclusion of a liability waiver.” The court also notably held that the employer willfully violated the FCRA by including the liability waiver in the disclosure, finding that no reasonable interpretation of the statute would allow any language besides a disclosure and authorization.

By way of background, the FRCA prohibits an employer from procuring a “consumer report” (e.g. a background report, credit report, etc.) on an employee or applicant without first providing a clear and conspicuous disclosure in a document consisting solely of the disclosure. FCRA litigation in recent years has primarily involved whether employers’ FCRA disclosure forms improperly included a release of liability or other “extraneous information” that violated the FCRA’s disclosure requirements.

In Syed, the Ninth Circuit agreed with the employee that the employer’s inclusion of waiver of liability language in the disclosure document willfully violated the FCRA. Analyzing the language of the statute and Congressional intent, the Ninth Court found that FCRA disclosure requirements are not met where a document contains any language other than the disclosure and an authorization. The court also reviewed the Supreme Court’s 2016 decision in Spokeo, Inc. v. Robins, but found that the employee in Syed had standing to bring the claim because he had alleged more than a “bare procedural violation” of the FCRA. For more information regarding the Spokeo case and other cases referring to the Supreme Court’s decision in Spokeo, please refer to our prior blog posts on the topic:

In its petition for certiorari to the Supreme Court, M-I argued that the Ninth Circuit incorrectly applied the Court’s holding in Spokeo when it found that Syed had standing to bring his claim under the FCRA. On November 13, the Supreme Court denied M-I’s petition without providing any explanation for the denial. As a result, the Ninth Circuit’s decision in Syed remains good law on both the issue of willfulness and the disclosure requirements under the FCRA.

The Syed decision serves as a warning to employers of the strict approach many courts have taken regarding the FCRA’s disclosure requirements. The Ninth Circuit’s determination that the inclusion of a liability waiver was a willful violation of the FCRA is of particular concern. Under the FCRA, willful violations can result in either actual damages or statutory damages, ranging from $100 to $1,000 per violation, which can result in significant potential liability in class action litigation.  There is also the possibility that employers may be hit with punitive damages for willful violations, which is at the court’s discretion.

Employers who obtain background checks from consumer reporting agencies must ensure their forms comply with the FCRA, as well as various state and local laws. Relying on disclosure and authorization forms provided to them by third-party vendors, including credit reporting agencies, is not recommended as such forms may include violations of the technical many provisions of the FCRA. Thus, employers should review their hiring forms with legal counsel to ensure they comply with the FCRA and applicable state and local laws.

We will continue to monitor and report on any further developments in the Syed case as well as any other developments related to the issues decided therein.

In honor of Data Privacy Day, we provide the following “Top 10 for 2017.”  While the list is by no means exhaustive, it does provide some hot topics for organizations to consider in 2017.

1.  Phishing Attacks and Ransomware – Phishing, as the name implies, is the attempt, usually via email, to obtain sensitive or personal information by disguising oneself as a trustworthy source. The IRS reported a 400 percent surge in phishing and malware incidents in 2016 and dedicates a page on its website to phishing and online scams. A relatively simply, yet extremely effective safeguard against such an attack is for organizations to advise employees (especially those in HR and Payroll) to be on the lookout for email requests, often appearing to come from a supervisor, for the personal information of all, or large groups of, the company’s employees. Before responding electronically, employees should verbally confirm such requests. This is especially true as organizations begin the W2 process and are compiling large amounts of personal information.

In some cases delivered by a phishing attack, ransomware is a type of malware that hackers use to stop you from accessing your data so they can require you to pay a ransom, often paid in cryptocurrency such as Bitcoin, to get it back. According to the FBI and the Department of Health and Human Services’ Office of Civil Rights, ransomware attacks have quadrupled, occurring at a rate of 4,000/day. These agencies and the Federal Trade Commission have offered guidance to help curb these attacks. Among other things, the guidance urges organizations to be prepared. A great start to combat ransomware’s effectiveness is for your organization to consider whether you maintain regular backups of your electronic systems.

2.  Safeguards Required to Protect Personal Information – State laws continue to emerge and expand requiring businesses to protect personal information. Joining states such as Florida, Massachusetts, Maryland, and Oregon, Illinois businesses must implement and maintain reasonable safeguards to protect personal information beginning January 1, 2017, and California clarified what it means to have reasonable safeguards. Similar rules go into effect in Connecticut beginning October 1, 2017, for health insurers, health care centers, pharmacy benefits managers, third-party administrators, utilization review companies, or other licensed health insurance business. And, during 2017 in New York, entities regulated by the state’s Department of Financial Services, such as banks, check cashers, credit unions, insurers, mortgage brokers and loan servicers, and some of their subcontractors, likely will become subject to a complex set of cybersecurity regulations many view as the first of their kind in the country.

3.  Big Data, Analytics, AI, Wearables, IoT – New technologies and devices continuously emerge, promising a myriad of societal, lifestyle and workforce advancements and benefits including increased productivity, talent recruiting and management enhancements, enhanced monitoring and tracking of human and other assets, and improved wellness tools. This will continue in 2017, and will require an unprecedented and unimaginable collection of data, which very often will be personal data. Federal agencies, such as the FTC and EEOC, and others are taking note. While these advancements are undoubtedly valuable, the potential legal issues and risks should be considered and addressed prior to implementation or use.

4.  HIPAA Privacy and Security Enforcement – The Office for Civil Rights continues in enforcement mode in 2017, announcing two settlements so far in January 2017, totaling nearly $3 million.  In one action, the agency addressed for the first time the 60-day rule for providing notification of breaches of unsecured protected health information. In this case, the covered entity discovered the breach involving 863 patients on October 22, 2013, but did not notify OCR until January 31, 2014, about 41 days late. The settlement amount was $475,000, or approximately $11,500 per day. OCR Director Jocelyn Samuels reminded covered entities that they “need to have a clear policy and procedures in place to respond to the Breach Notification Rule’s timeliness requirements.”

5.  Breach Notification Laws – There are currently 47 states with breach notification laws, and they continue to be updated. For example, beginning in 2017, California businesses and agencies can no longer assume that notification is not required when personal information involved in the breach is encrypted. Illinois also changed its breach notification law, effective January 1, 2017, to, among other things, expand the definition of “personal information” to include medical information, health insurance information, and unique biometric data. These laws continue to evolve and be amended to address the extensive amount of sensitive data that is stored electronically.

6.  The Telephone Consumer Protection Act (TCPA) – 4,860 TCPA lawsuits were filed in 2016 according to statistics compiled by WebRecon LLC. This represents an almost 32% increase over 2015 and marks the 9th consecutive year where the number of TCPA suits increased from the preceding year. With the SCOTUS decision in Campbell-Ewald making defense of class actions under the TCPA more difficult, we expect the number of TCPA suits to continue to grow in 2017. Many of these suits are not just aimed at large companies.  Instead, these suits are often focused on small businesses that may unknowingly violate the TCPA and can result in potential damages in the hundreds of thousands, if not millions, of dollars.  Understanding the FAQs for the TCPA and taking steps to comply with the TCPA is a great first step.

7.  The EU General Data Protection Regulation (GDPR) and the EU-U.S. Privacy Shield – GDPR has been adopted, and while it will not apply until May 25, 2018, there is a lot to do to get compliant. For example, GDPR adds a data breach notification requirement for data controllers; if notification is required, it must be provided to the data protection authority within 72 hours. Also, the EU-U.S. Privacy Shield data transfer agreement (“the Privacy Shield”) was reached to replaced the EU-U.S. Safe Harbour agreement which was invalidated on October 6, 2015, by the Court of Justice of the European Union’s (CJEU) ruling in Schrems v. Data Protection Commissioner. As of August 1, 2016, organizations based in the U.S. were able to self-certify their compliance with the Privacy Shield. Please review our detailed Q&A on some of the most common questions.

8.  President Trump – As we near the end of the President’s first full week in office, it remains to be seen just how the new administration will address privacy and cybersecurity issues. We considered some of these issues shortly after the election based on the President’s campaign which may provide some insight while we await more clarity from the White House.

9.  Social Media Investigations – Social media use continues to grow on a global scale and become more and more prevalent for organizations. This is especially true as generations who have lived their entire lives in a Social Media World represent an ever expanding percentage of the workforce.   User profiles or accounts are regularly sought and reviewed in litigation and/or employment decisions.   While public content may generally be viewed without issue, employers need to be aware of how they are accessing social media content and ensure they are doing so consistent with state laws protecting social media privacy and avoiding access to information they would rather not have.

10.  Be Vigilant and Watch for Changes – As more and more personal information and data is available and stored electronically, it is important for organizations to realize this data is extremely valuable, especially in the wrong hands. To this end, and as outlined above, organizations should be constantly assessing how best to secure their electronic systems. This is particularly true as the law and industry guidance are constantly changing and evolving in an effort to keep up with technological advancements.

 

In honor of Data Privacy Day, we provide the following “Top 10 for 2016.”  While the list is by no means exhaustive, it does provide some hot topics for organizations to consider in 2016.

  1. EU/U.S. Data Transfer (status of Safe Harbor).  On October 6, 2015, the Court of Justice of the European Union (CJEU) ruled in Schrems v. Data Protection Commissioner (Case C-362/14) that the voluntary Safe Harbor Program did not provide adequate protection to the personal data of EU citizens. The Safe Harbor Program was used extensively by organizations that needed to transfer data from the EU to the U.S. Post Schrems U.S. companies have been unclear what to do to transfer data out of the EU in a compliant manner. The ultimate resolution of this issue is one of the most anticipated privacy topics for 2016.
  2. People Analytics including Employee Tracking/Wearables.  The Federal Trade Commission’s January 2016 report discussing “big data” raised a number of issues for organizations concerning the use of data analytics with respect to both consumer data, as well as the application of big data tools in the workplace. People analytics refers generally to a data-driven approach to managing an organization’s human capital, and it is likely to be a significant trend for employers in the months and years ahead. Some of the data to perform the analytics is collected through the devices employees use and wear. For example, as GPS and RFID enabled devices become more prevalent, employers are faced with the difficulty of balancing the workplace risks against the ability to obtain information about employees’ whereabouts which can substantially increase productivity. Similarly, wellness programs seek to incentivize employees (including the members of their household) to live “healthier” lives. Wearable technologies such as FitBit allow for the collection of data which when analyzed can have substantial benefits and help control healthcare costs, but they can also raise privacy and discrimination risks.
  3. Risk Assessment/Written Information Security Program. Many businesses remain unaware of how much personal and confidential information they maintain, who has access to it, how it is used and disclosed, how it is safeguarded, and so on. Getting a handle on a business’ critical information assets must be the first step, and is perhaps the most important step to tackling information risk. It is logically impossible to adequately safeguard something you are not aware exists. In fact, failing to conduct a risk assessment may subject the business to penalties under federal and/or state law. Even if adopting a written information security program (WISP) to protect personal information is not an express statutory or regulatory mandate in your state (as it is in states such as CA, CT, FL, MA, MD, OR, etc.), having one is critical to addressing information risk. Importantly, an organization’s WISP should also address company data outside of the company’s control, such as data or information which is provided to vendors who provide services to an organization. Not only will a WISP better position a company when defending claims related to a data breach, it will also help the company manage and safeguard critical information and potentially avoid a breach from occurring in the first place.
  4. The Telephone Consumer Protection Act (TCPA).  According to statistics compiled by WebRecon LLC, 3,710 TCPA lawsuits were filed in 2015, representing an increase of 45% over 2014. Demonstrating consistency, 2015 marked the 8th year in a row where the number of TCPA suits increased from the preceding year. Tellingly, 23.6% of those suits (877) were filed as putative class actions. With the recent SCOTUS decision in Campbell-Ewald making defense of class actions under the TCPA more difficult, we expect the number of TCPA suits to continue to grow in 2016. Many of these suits are not just aimed at large companies.  Instead, these suits are often focused on small businesses that may unknowingly violate the TCPA.  With statutory damages ranging from $500 to $1500 per violation (e.g. per fax/text sent or call made) these suits often result in potential damages in the hundreds of thousands, if not millions, of dollars.  Understanding the FAQs for the TCPA and taking steps to comply with the TCPA is a great first step as we enter 2016.
  5. Industry Specific Guidance.  Whether it is the U.S. Food and Drug Administration (FDA) or the U.S. Commodity Futures Trading Commission (CFTC), organizations will need to remain vigilant in 2016 to ensure they are addressing industry specific rules or guidance regarding cybersecurity and the safeguarding of the information they maintain.
  6. BYOD/COPE.  Many organizations have adopted policies allowing employees to utilize their own electronic devices in the workplace, and are turning to Bring Your Own Device (“BYOD”) programs but without considering all of the risks and related issues. Some are sticking with Corporate Owned Personally Enabled (“COPE”) programs.  If you are considering BYOD, you should review our comprehensive BYOD issues outline and determine whether BYOD or COPE is the best option for your organization.
  7. Investigating Social Media.  The use of social media continues to grow on a global scale, and the content available on a user’s profile or account is often being sought in connection with litigation and/or employment decisions. While public content may generally be viewed without issue, employers need to be aware of how they are accessing social media content. This is especially true as the list of states protecting legislation to protect social media privacy continues to grow. In a litigation context, if private content is accessed improperly, serious repercussions can follow.
  8. Federal Trade Commission (FTC) & Federal Communications Commission’s (FCC) Enforcement Re: Data Security.  Both the FTC and FCC continued enforcements actions in 2015 in connection with companies’ alleged failure to properly safeguard data. FCC actions resulted in consent decrees which included penalties in the hundreds of thousands of dollars, and mirrored previous consent decrees entered into by the FTC. However, 2015 decisions in cases stemming from the FTC’s actions found the FTC may have difficulty meeting its burden of proving that a company’s alleged unreasonable data security practices caused substantial consumer injury or that any consumer whose personal information was maintained by a company suffered any harm as a result of such alleged conduct. For 2016 it remains to be seen just how far the FCC and FTC will go to continue enforcement actions related to data security. Nevertheless, organizations still need to be conscious of the statements or promises they make concerning their data security practices and implement appropriate safeguards to protect the personal information they maintain.
  9. HIPAA Compliance. The Office for Civil Rights (OCR) stated that in early 2016 it will launch Phase 2 of its audit program measuring compliance with HIPAA’s privacy, security and breach notification requirements by covered entities and business associates. We previously discussed, having the right documents in place can go a long way toward helping an organization survive an OCR HIPAA audit. Now that it appears these audits are coming, it is important that covered entities and business associates invest the time in identifying and closing any HIPAA compliance gaps before an OCR investigator does this for them. This is particularly true as some of the largest HIPAA settlements to date are less about harm, and more focused on compliance.
  10. Develop a Plan for Breach Notification. All state and federal data breach notification requirements currently in effect require notice be provided as soon as possible (with some setting forth specific time periods). Failing to respond appropriately could result in significant liability.  Employers need to be conscious of data breach issues as the leading cause of breaches is employee error. Developing a breach response plan is not only prudent but also may be required under federal or state law.  A proactive approach is often the simplest and cheapest way to avoid liability.

Be Vigilant and Watch for New Legislation. Managing data and ensuring its privacy, security and integrity is critical for businesses and individuals, and is increasingly becoming the subject of broad, complex regulation. As such, companies are left to navigate the constantly evolving web of growing state legislation and/or industry guidance. Organizations therefore need to be vigilant in order to remain compliant and competitive in this regard.

Last week, New Jersey’s Governor, Chris Christie (R), signed a bill which will allow telemarketing companies to make sales calls to mobile devices when the call is made to a customer with whom an existing relationship exists or in response to the customer’s written request.

While many companies focus on complying with the Telephone Consumer Protection Act (TCPA), companies who conduct outgoing calling campaigns cannot overlook states law which may be more restrictive that the TCPA.  New Jersey’s law for example, applies to all telemarketing calls, regardless of the whether or not an automatic dialing system is utilized.  As we have previously detailed, to fall within the TCPA, companies need to utilize automatic telephone dialing systems to make the calls in question.

The signed bill (S.1382) immediately amends N.J. Stat. Ann. § 56:8-130, New Jersey’s do not call law, to prohibit only unsolicited telemarketing calls to mobile devices.  Prior to the amendment, all telemarketing calls to mobile devices, regardless of whether an automatic telephone dialing system was used, were prohibited unless the call was from a commercial mobile service company to its customers and related to the company’s mobile services.

In honor of National Data Privacy Day, we provide the following “Top 15 for 2015.”  While the list is by no means exhaustive, it does provide some hot topics for businesses to consider in 2015.

  1. Inside Threats for Healthcare Providers and Business Associates.  While news reports of security risks often focus on hackings and breaches caused by individuals, terror groups or even countries around the world, many organizations, including healthcare providers and business associates, face a significant and perhaps more immediate risk with an organization’s workforce members.  However, these organizations are not without recourse and can take several steps to reduce their risk for a data breach, reputational      harm, investigation by federal and state agencies, and litigation.
  2. The Telephone Consumer Protection Act (TCPA).  According to data cited by the U.S. Chamber of Commerce, TCPA suits have increased 30% in the past year, with many of those suits being filed as class actions.  Notably, many of these suits are not just aimed at large companies.  Instead, these suits are often focused on small businesses who may unknowingly violate the TCPA.  With statutory damages ranging from $500 to $1500 per violation (e.g. per fax/text sent or call made) these suits often result in potential damages in the hundreds of thousands, if not millions, of dollars.  Understanding the FAQs for the TCPA is a great first step as we enter 2015.
  3. Location Based Tracking.  As the utilization of GPS enable devices becomes more and more prevalent, employers are often faced with the  difficult decision of just how much information they may obtain about an employee’s whereabouts.  This is particularly true when an employee is absent from work, is traveling for business, or makes a representation as to their location which the employer questions for one reason or another.  The case law in this area is evolving rapidly, and both the public and private sector can expect to continue to face this issue in the future.
  4. Company Budgets with Respect to Technology.  With each passing year, we see an increase in the amount of technology available to businesses and their employees.  While many tech initiatives are focused on increasing employee productivity or company profits, business also must be prepared to appropriately increase their IT      and data security budgets accordingly.  As more company information is shifted to the cloud or available to employees remotely, budgetary constraints will not provide a justification for poor tech support or data security.      
  5. “HIPAA Litigation.”  While HIPAA does not provide for a private cause of action, cases were brought in 2014 which utilized the HIPAA rules as an element in common law tort claims.  By way of example, the Connecticut Supreme Court held that HIPAA did not preempt a negligence claim in connection with the healthcare provider’s disclosure of patient information in response to a subpoena.  While it remains unclear whether liability will ultimately be determined, these cases will likely give potential plaintiffs legal precedent to file these types of actions and the outcome of these actions should be monitored closely throughout 2015.
  6. BYOD.  More and more businesses are realizing the risks of allowing employees to utilize their own electronic devices in the workplace and are turning to Bring Your Own Device (“BYOD”) programs to diminish some of these risks.  Additionally, 2014 saw some companies shy away from BYOD and return to a strict company owned device policy.  Businesses considering BYOD should review our comprehensive BYOD issues outline.
  7. User Generated Health Data.  The transformation of health information into electronic format has been well documented and will continue into the  future.  However, one of the biggest concerns for 2015 is health data which an individual voluntarily provides to track or chart their own health or fitness.  Devices such as Nike Fuelband, Fitbits, or      similar devices or applications continue to allow individuals to enter and store more and more health information about themselves electronically.  However, the privacy or security of this information is largely up for debate.
  8. Risk Assessment. As we have previously mentioned, many businesses remain unaware of how much personal and confidential information they maintain, who has access to it, how it is used and disclosed, how it is safeguarded, and so on. Getting a handle on a business’ critical information assets must be the first step, and is perhaps the most      important step to tackling information risk. It is logically impossible to adequately safeguard something you are not aware exists. In fact, failing to conduct a risk assessment may subject the business to penalties under federal and/or state law.
  9. Develop a Written Information Security Program. Even if adopting a written information security program (WISP)      to protect personal information is not an express statutory or regulatory mandate in your state (as it is in MA, MD, TX, CT, etc.), having one is critical to addressing information risk. Not only will a WISP, and      associated training, better position a company when defending claims      related to a data breach, but it will help the company manage and safeguard critical information, potentially avoid a breach from occurring in the first place, and may even help the company avoid whistleblower claims from employees.
  10. Dealing with Vendors.  One area of high risk for company data is its use or access by a company’s vendors during the course of the vendor services.  Companies need to be aware of the legal requirements concerning the company owned data in this scenario as well as how to negotiate confidentiality and security provisions in the applicable services agreement.
  11. Develop a Plan for Breach Notification. All state and federal data breach notification requirements currently in effect require notice be provided as soon as possible. Failing to respond appropriately could result in significant liability.  This is true even when the number of individuals affected is relatively small.  As we have seen this past year, a data breach can not only harm a company’s bottom line, but also can negatively impact the company’s reputation in the marketplace.  Developing a breach response plan is not      only prudent but also may be required under federal or state law.  A proactive approach is often the simplest, and cheapest way, to avoid liability.
  12. Federal Trade Commission (FTC) & Federal Communications Commission’s (FCC) Enforcement Re: Data Security.  2014 saw the FTC continue to regulate      company data security practices by bringing enforcement actions against many types of businesses.  In one of the most significant cases of FTC enforcement, LabMD challenged the FTC’s authority to engage in enforcement activity related to its data security practices absent specific statutory authority to do so.  In a recent ruling, the Eleventh Circuit sided with the FTC and held that companies that find themselves subject to regulatory investigation cannot seek judicial aid in avoiding FTC jurisdiction until the FTC’s actions are      final. Practically speaking, the Eleventh Circuit’s decision means that companies will find no relief from a court until the FTC issues a final agency action.  Similarly, 2014 saw      the FCC issue its first fines against a telecommunications carrier for the carrier’s alleged failure to reasonably secure their customer’s personal information in violation of the companies’ statutory duty under the Communications Act.  We anticipate 2015 will see additional action by the FTC & FCC, as well as legal challenges to any enforcement by either agency.
  13. Investigating Social Media.  Social media continues to grow on a global scale, and the content available on a user’s profile or account is often being sought in connection with litigation.  In fact, failure to preserve relevant information in social media may have dire consequences.  Further, while public content may generally be utilized without issue, if private content is accessed improperly, serious repercussions can follow.
  14. Watch for New Legislation.   Today, managing data and ensuring its privacy, security and integrity is critical for businesses and individuals, and is increasingly becoming the subject of broad, complex regulation. This is especially true given the number of significant data breaches that occurred throughout 2014.  While no national law requiring them protection of personal information has yet to be passed in the U.S., President Obama has stated that data security is one of the top issues for legislation in 2015.  In the      interim, companies are left to navigate the constantly evolving web of growing state legislation. Companies therefore need to stay tuned in order to continue to remain compliant and competitive in this regard.
  15. Jackson Lewis Webinar Series.  Given the numerous developments in the world of data privacy and security, Jackson Lewis will be hosting a comprehensive webinar series to address these issues and how they may impact your business.  We hope you can join us.

The Federal Communications Commission (FCC) is continuing its efforts to clarify the Telephone Consumer Protection Act (TCPA) and its requirements.

To this end, the FCC is seeking comments by tomorrow, January 13, 2015, on eleven petitions seeking waiver of the FCC’s rule on opt-out notices on fax advertisements to recipients who have provided prior express invitation or permission.   Specifically, the petitioners seek retroactive waiver  of the opt-out notice requirement for fax ads which the petitioners assert were sent where prior express invitation or permission had been obtained from the recipient.  The petitioners argue that good cause exists because they are similarly situated to parties who were previously granted retroactive waivers from this requirement by the FCC because of uncertainty about whether the opt-out notice applied to “solicited” faxes.

Under the TCPA, unsolicited faxed advertisements are prohibited unless the sender has an established business relationship with the recipient; the recipient voluntarily communicated his or her fax number directly to the sender or a directory; and the faxed ad also contains an opt-out notice.

While comments are due tomorrow, reply comments are due January 20, 2015.

Complying with the Telephone Consumer Protection Act (TCPA) is a growing concern for employers and others. This is especially true given that suits under the TCPA have regularly resulted in damage awards of hundreds of thousands, if not millions, of dollars.

We have developed a comprehensive set of frequently asked questions concerning TCPA. If you are interested in learning more about the TCPA, and its impact on your business:

In what may be considered a blow to class action defense, this week the U.S. Court of Appeals for the Eleventh Circuit ruled that an offer of judgment to the named plaintiffs did not moot a proposed class action.  This was a case of first impression before the Eleventh Circuit.

The putative class action,  Stein v. Buccaneers LP, alleges that owners of the Tampa Bay Buccaneers sent unsolicited faxes advertising ticket sales to the plaintiff and more than 100,000 others nationwide in violation of the Telephone Consumer Protection Act (TCPA).   After removing the matter to federal court, the defendant, Buccaneers LP, made offers of judgment under Fed. R. Civ. P. 68 to each of the six named plaintiffs based on the alleged number of faxes each received.   In what courts have sometimes called a “pick-off,” two days after making the offers of judgment, Buccaneers LP moved to dismiss the case for lack of jurisdiction.  Specifically, Buccaneers LP argued that the unaccepted offers of judgment, which provided each named plaintiff with the full relief they were entitled to under the TCPA, rendered the case moot.  Thereafter, the plaintiffs filed a motion for class certification.  The district court denied the motion for class certification and after the plaintiffs failed to accept the offers of judgment within the 14 day deadline, the district court held that the action was moot and dismissed the case.

In reversing the district’s court’s dismissal of the case, the Eleventh Circuit held that a defendant can’t moot a class action through an unaccepted offer of judgment made to the named plaintiffs before the plaintiffs have moved to certify the class.  While the Seventh Circuit has held otherwise, the Eleventh Circuit stated that the Third, Fifth, Ninth and Tenth Circuits have reached the same conclusion: “a Rule 68 offer of full relief to the named plaintiff does not moot a class action, even if the offer precedes a class-certification motion, so long as the named plaintiff has not failed to diligently pursue class certification.”

Many of us have likely received a notification from our bank or credit card company concerning suspected fraud or improper charges.  However, the legality of those messages is not always clear.  To this end, on October 14, 2014, the American Bankers Association (Association) filed a petition for exemption requesting that the Federal Communications Commission (FCC) exempt “certain time-sensitive information calls, placed without charge to the called parties from the Telephone Consumer Protection Act’s (TCPA)restrictions on automated calls to mobile devices.”

Specifically, the Association asked the FCC to exempt automated calls and text message alerts to wireless telephone numbers concerning:  (1) transactions and events that suggest a risk of fraud or identity theft; (2) possible breaches of the security of customers’ personal information; (3) steps consumers can take to prevent or remedy harm caused by data security breaches; (4) money transfer notifications and notifications of actions needed to arrange for receipt of pending transfers.  The Association’s petition explains that automated communications to mobile devices would be without charge and are best suited to provide quick and efficient notifications to customers in time-sensitive situations, such as in cases of data security breaches or attempted identity theft.  Additionally, the petition proposed certain conditions on these automated calls and text message alerts, if exempted.  In particular, the petition specifies that the calls or messages would not include any solicitation, telemarketing, or advertising information, and would only be sent to the telephone number of the consumer to whom the alert or notification is directed.

Under the TCPA and the FCC’s implementing rules, an entity is prohibited from using an automatic telephone dialing system or an artificial or prerecorded voice to make a call to a wireless number absent an emergency or the prior express consent of the called party.  Notably, the FCC may exempt calls to wireless numbers that are not charged to the called party and which protect consumer privacy.

In light of the petition, the FCC is now seeking comment on the issues raised, including whether the exemptions requested allow the financial services industry to reduce privacy and security risks proactively so that fraud, data security breaches, and identity theft are less likely to occur.  Comments must be submitted to the FCC by December 8, 2014 with reply comments due by December 22, 2014.