Back in April 2019, we warned cannabis companies they were becoming a target for Telephone Consumer Protection Act (TCPA) litigants. Well, Google the terms “TCPA” and “cannabis” today and you will find pages of articles and alerts since then detailing new TCPA actions against cannabis businesses.
It seems like no one is being spared.
The TCPA governs all forms of unsolicited marketing and advertising completed via phone calls and text messages, including the use of autodialers, which because of regulations on advertising, is a primary component of many cannabis retailer outreach strategies.
Hundreds of complaints have been filed since the trend began, and the industry is on track to see more than a hundred new lawsuits in 2021. Since the year began, cases have been filed against Erba Markets Inc., Septem Coma Inc., Alpha Core Inc., 2015 Halladay Wellness Inc., Soar Collective Inc., Green Genie Inc., K.U.S.H Collective and Curaleaf Inc., just to name a few. Many of these will settle for more than they should. That’s what class action allegations can do. As the U.S. Senate recognized back in 2005, “because class actions are such a powerful tool, they can give a class attorney unbounded leverage, particularly in jurisdictions that are considered plaintiff-friendly. Such leverage can essentially force corporate defendants to pay ransom to class attorneys by settling — rather than litigating — frivolous lawsuits.”
Seem unfair? Sometimes it is. But the TCPA is the golden child that legislators can hold up to tell constituents their complaints about junk texts and robocalls are not falling on deaf ears. It isn’t going anywhere. However, legitimate businesses shouldn’t fret. With the right compliance measures — and the right litigation strategy when compliance breakdowns happen — companies can often avoid being tagged with these suits and can turn the tables when complaints inevitably get filed.
In terms of compliance, you need experienced counsel, and you need to be running consent-based marketing campaigns. However, not all consents are created equally. Generally, to safely conduct telephone marketing, you need prior express written consent. There are different levels of consent for different provisions of the statute, but prior express written consent is the gold standard.
In case it was not already clear, the TCPA applies to more than just call centers. On a basic level, the TCPA prohibits a few things, including making telemarketing calls or sending texts to residential subscribers of the National Do-Not-Call Registry, and initiating any text or call to a cellular telephone with a prerecorded or artificial voice or an automatic telephone dialing system (ATDS). What exactly is an ATDS? Grab a coffee and get ready for a few hours of research to get that answer. And when you’re done, you might need a chamomile tea to settle the anxiety that you’re still not sure of the answer. The weeds of the TCPA are thick. Depending on the jurisdiction you’re in, different courts may have different standards. The Federal Communications Commission, which sets policy and issues regulations to implement the TCPA, can’t even set a straight answer. Luckily, the Supreme Court is set to decide that issue once and for all this year.
In terms of litigation, you want aggressive counsel. These cases are often “bet the company” actions where liability can be estimated in the tens of millions of dollars, or more. The number of cases we’ve seen settle for more than they should have is staggering. Those results can often be the product of, in part, a sit-back-and-wait litigation strategy. But when it comes to TCPA class action litigation, sit-back-and-wait will often equate to sit-back-and-pay.
Our group recently defeated a class action bid valued at more than $150 million in Aaron Hirsch v. USHEALTH Advisors, LLC et al. Aggressive and creative litigation strategies played a key part in that decision. We attacked discovery head-on to uncover all of the plaintiff’s litigation warts. It worked. We learned that the plaintiff drummed up the case with his attorney and a close friend as part of a scheme to profit through the TCPA in which he learned to feign interest to elicit follow-up telephone calls that he alleges violated the TCPA — calls he would then file suit over when his friend/attorney deemed it appropriate. We also learned that he used his cellphone as his primary business number, even claiming payments as business deductions on his tax returns, a no-no for the kinds of claims he brought. We also placed an early focus in the litigation on highlighting for the court the many individualized issues that ultimately defeated class certification.
The court adopted many of our arguments and authorities and likened the plaintiff to a “fool” who “desires impossibilities.”
Don’t pity the fool, however, or you just might be the next TCPA target. If you are, we’ll be here to help.