Ninth Circuit Revives TCPA Claim–Satterfield v. Simon & Schuster

By Eric Goldman

Satterfield v. Simon & Schuster, Inc., No. 07-16356 (9th Circuit June 19, 2009)

Satterfield sued Simon & Schuster (and its mobile ad agency) for sending text messages to her cellphone without the requisite permission. The district court dismissed her lawsuit; but in this ruling, the Ninth Circuit revives it. Three aspects of this ruling make it noteworthy.

When is a Text Message a Telephone Call?

The court holds that a text message to a cellphone is a “call” for purposes of the Telephone Consumer Protection Act (TCPA). This isn’t unprecedented. The FCC took this position in 2003, and in 2005, I blogged on the Joffe v. Acacia Mortgage case reaching the same conclusion. Nevertheless, as I pointed out in response to the Joffe case, it reminds us of the silliness of medium-specific anti-marketing restrictions when the media collapse into each other. See my Coasean Analysis of Marketing paper for more.

Poor Consent Language

Satterfield signed up for a free ringtone from Nextones. As part of the registration process, Satterfield affirmatively checked off a box next to the following language:

Yes! I would like to receive promotions from Nextones affiliates and brands. Please note, that by declining you may not be eligible for our FREE content.

This language is hardly a model of clarity. What are “Nextones brands”? What are “Nextones affiliates”? The court adopts a trademark-style definition for “brands” and a corporate governance-rooted definition for “affiliates.” Interestingly, Nextones posted its own definition of affiliates elsewhere on its site to mean other companies who “sell mobile content such as ringtones and graphics.” As the court points out, “Simon & Schuster does not fall within Nextones’ own definition.” Whoops.

Obviously, better drafting could have easily avoided this problem and probably would have had little effect on conversion rates. Say what you mean, and mean what you say!

For what it’s worth, one of my past Cyberlaw exams involved an ambiguously drafted online checkbox consent, a problem partially based on a real-life situation encountered by Yahoo. See the exam and sample answer.

Complex Chain of Distribution

Satterfield’s cellphone number/text message address fell into Simon & Schuster’s hands through a complex chain of distribution as follows:

Satterfield gives # to Nextones =>

Nextones gives # to MIA, its “exclusive agent for licensing the numbers of Nextones subscribers” (huh?) =>

MIA gives # to ipsh!, which describes itself as “the world’s award-winning, full-service mobile marketing and advertising agency” =>

ipsh! gives # to mBlox, an aggregator who “handled the actual transmission of the text messages to the wireless carriers” =>

Simon & Schuster contracts with ipsh! to run a text message campaign for Simon & Schuster’s new Steven King novel Cell. (Ironic name? Maybe this lawsuit will spur Stephen King to write a sequel, Cellphone).

As you know, lawyers aren’t very good at math, but according to my count, it looks like four different intermediaries “touched” Satterfield’s number (Nextones, MIA, ipsh! and mBlox) before it was used by Simon & Schuster, the ultimate advertiser. With that many intermediaries, there are significant additional transaction costs to reach cellphone subscribers.

More importantly, this complex chain creates a sizable risk that one or more of the entities along the way would misinterpret or forget any restrictions on the customer’s grant of permissions. Certainly, I can’t figure out how Nextones/MIA thought this distribution chain fit within the checkbox consent it asked for and received. (Interestingly, neither Nextones nor MIA are defendants in the case).

I also cannot figure out how ipsh!/Simon & Schuster failed to detect this permissions problem in their diligence. They did diligence the source of the cellphone numbers…didn’t they? They didn’t just blindly assume that they could purchase a package of random cellphone numbers and party on…did they?