Recent FCC Order Helps Shopkick Defeat TCPA Claims

August 31, 2015 · by Venkat Balasubramani · in E-Commerce, Marketing, Spam

This is a TCPA lawsuit against Shopkick, a rewards-based app that lets shoppers accumulate and use in-store rewards. Plaintiff brought a putative class action, alleging that Shopkick caused invites to be sent to users’ contacts. Shopkick previously filed a motion to dismiss, which the court rejected. (Prior post here: “Shopkick Unable to Shake Text Spam Complaint”.) Relying on a recently issued FCC Telephone Consumer Protection Act Order, Shopkick argued that it was not the “maker or initiator” of the messages at issue.

The court reviews the FCC Order, which dealt with, among other matters, petitions filed by texting/calling apps, including TextMe, addressing user-initiated texts. The FCC found that TextMe app’s invitations were not initiated by TextMe; the Shopkick court finds this interpretation reasonable and applicable to the messages at issue. Two factors pointed in the direction of Shopkick being the sender: (1) the users could not alter the content of the messages, and (2) the content of the messages could be construed as advertisements for Shopkick. Nevertheless, as the FCC did with TextMe, the court focuses on the “affirmative choice” required by the user to send the messages, and finds that in this case the users, not Shopkick, are the senders.

Shopkick’s evidence, apparently uncontroverted, showed:

a user of its app “must [have] proceed[ed] through a multi-step invitation flow within the app” to cause text messages to be sent to contacts in the user’s phone. First, the user must have affirmatively granted the Shopkick app “permission to access the user’s contacts in the phone.” Second, when the app provided the user with the option to “invit[e] friends,” the user must have responded by selecting “Continue” rather than “No, thanks.” Third, once the user clicked “Continue,” the user would have been shown a series of screens by which he or she was given the option of selecting the contacts to whom the invitations would be sent. Fourth, once the user selected contacts, the user would have been shown a screen listing the chosen contacts and the “format” in which the invitations were to be sent,6 after which, to cause the invitations to be sent, the user would have then pressed a button stating “Invite Friends.”

Plaintiffs argued that Shopkick’s description of the process was not accurate vis a vis the version of the app at issue in the lawsuit, but Shopkick offers evidence to this effect (which goes unrebutted). Plaintiffs also argued that the Shopkick texts differed form the TextMe ones because the Shopkick texts were more obviously commercial. The TextMe texts had some arguable benefit to the users–expanding their communication network–which was not as obvious for the Shopkick texts (they were more in the nature of one-time referral credits or points, and had no ongoing benefit to the referring user). Plaintiffs also argued that Shopkick did not disclose the precise method of transmission of the referral messages, but Shopkick’s evidence was conclusive on this point (“providing, as example, screen informing user that ‘189 texts 1778 emails 959 facebook’ invitations would be sent if user pressed ‘Invite friends’ [!!]”). Finally, plaintiffs argued that Shopkick should be held liable under an agency theory, but the court rejects this. An earlier FCC ruling plaintiffs relied on in support of their argument involved TCPA violations by third party marketing agents. The court says this rationale is not applicable. Additionally, the court says that plaintiffs have not shown that users are agents of Shopkick.

The TCPA’s Omnibus Declaratory Ruling and Order (July 10, 2015) covered a lot of ground, including re-assigned phone numbers, consent issues, and the definition of “autodialer”. Two commissioners dissented to the Order. The Order has already spawned several legal challenges. I hope to summarize some of the Order’s points in another blog post. As relevant here, however, the Order found that “friend invitation texts” could in certain situations be treated as initiated by the users and not by the platform. In the examples used in the Order where the platforms were found to not be responsible for the messages, the platform left it up to the user whether to invite friends and which friends to invite. The court finds those factors equally applicable here. Assuming the disclosures to the user are not deceptive, this seems like the right result.

I previously blogged about group texting companies’ struggles TCPA class actions (“Group Text Services Grapple with TCPA Class Actions“). It’s unclear which of the messages from a platform could fall under the “user-initiated” exception the court relies on here. The user’s own message would obviously be covered, but follow-up messages from the platform are not necessarily covered. Indeed, one platform prevailed on summary judgment in a case involving such texts, but the ruling did not rely solely on the user being the driving force behind transmission of the messages. The ruling (Glauser v. GroupMe), which is being appealed, combined the questions of the auto-dialer, human intervention, and consent.

Plaintiffs’ made the argument against Shopkick that the messages from Shopkick had more of a promotional bent, but the court says this is not relevant. While courts have interpreted “informational messages” narrowly (Chesbro v. BestBuy), and the Order also does not distinguish between commercial and informational messages to wireless numbers, the ruling ends up focusing on user volition.

The TCPA has spawned a crazy amount of plaintiff’s litigation. The tide appears to be turning in the other direction, with at least a few recent defense-side rulings. Also, there’s been a marked decrease in CAN-SPAM litigation, with an increase in TCPA litigation. (Refer a friend lawsuits were popular with spam litigation plaintiffs as well.) Perhaps companies and plaintiffs have shifted their energies to the text message medium.

Case citation: Huricks v. Shopkick, No. C-14-2464 MMC (N.D. Cal. Aug. 24, 2015)

Shopkick Unable to Shake Text Spam Complaint — Huricks v. Shopkick

TCPA Claim Against Taco Bell Fails For Lack of Agency

TCPA Claim Over Yahoo!’s IM to SMS Messaging Survives Summary Judgment

Confirmatory Opt-out Text Message Not Actionable Under the TCPA — Ryabyshchuck v. Citibank

Franchisor Isn’t Liable Under the TCPA for Franchisees’ Text Message Campaign – Thomas v. Taco Bell

Confirmatory Opt-Out Text Message Doesn’t Violate TCPA – Ibey v. Taco Bell

Group Text Services Grapple with TCPA Class Actions

Court Rejects Constitutional Challenge to TCPA Based on Vagueness in “Prior Express Consent” Exception — Kramer v. Autobytel, Inc.

Ghostwritten Attorney Newsletter is an “Ad” for TCPA Junk Fax Law Purposes–Holtzman v. Turza

Another Court Finds that TCPA Applies to Text Messages — Lozano v. Twentieth Century Fox Film Corp.

Court Finds that SMS Spam Messages are Subject to the TCPA and Rejects First Amendment Defense — Abbas v. Selling Source, LLC