Ninth Circuit’s Do Not Call Decision Effects B2B Callers

The Ninth Circuit’s do not call decision, recently issued, could have significant ramifications for B2B telemarketers as longstanding Telephone Consumer Protection Act standards were overthrown. The Court held that mixed-use telephone numbers listed on the national Do-Not-Call Registry are presumptively residential to confer standing under the TCPA and that the defendant, not the plaintiff, has the burden to prove the number is a business number and not residential after discovery.

The TCPA was enacted to protect consumers from unwanted calls that invade home privacy. Congress tasked the Federal Communications Commission with implementing the TCPA. Accordingly, the FCC prohibited unsolicited telemarketing calls to “residential telephone subscribers” listed on the national DNC Registry unless certain exemptions apply. With few exceptions, B2B calls are one such exemption. However, the B2B exemption has become complicated with the emergence of cell phones that are used for both residential and business purposes, i.e., mixed-use phones.

In the case, Chennette, et al. v. Porch.com, Inc., et al, the plaintiffs, all home-improvement contractors, alleged the defendants, home-improvement lead generators, sent unsolicited text messages using an automatic telephone dialing system to plaintiffs’ mixed-use cell phones, including 15 plaintiffs who listed their number on the national DNC Registry. Plaintiffs sued the defendant under the TCPA alleging violations for autodialed calls and for calls to residential lines listed on the Do-Not-Call Registry. The district court dismissed the case in line with prior precedent, holding that the plaintiffs did not have standing to bring their claims because the TCPA’s DNC provisions were not intended to apply to business numbers like plaintiffs’ cell phones.

The Ninth Circuit, however, reversed and created a presumption that mixed-use phones, even if advertised and used for business, are primarily residential. This presumption gives plaintiffs automatic standing to allege DNC violations under the TCPA, which defendants may rebut only after discovery by showing the number is a business number.

Alternatively, the Court could have referred the issue of what constitutes a “residential telephone” to the FCC under the primary jurisdiction doctrine, which allows courts to postpone the judicial process and refer an issue to an especially competent agency for the purpose of ensuring regulatory uniformity. The Court also could have created a bright-line test for determining whether a mixed-use phone is considered residential, which would have allowed telemarketers to make compliance determinations before calling mixed-use phones.

The defendants petitioned asking the Court to rehear and reconsider arguments, and The Professional Association for Consumer Engagement filed an Amicus brief in support of their petition, drafted by Mac Murray & Shuster as general counsel for the association. However, the request was denied, and the case will now go back to the original venue, where the Court’s presumption will be applied. The defendants have a further opportunity to appeal the decision to the U.S. Supreme Court.

As the decision now stands, B2B callers face increased operational costs because they will have to scrub business numbers, whether cell or landline, against the Do-Not-Call Registry (access to all U.S. area codes for FY 2023 is $20,740) or make an educated guess as to whether the number is primarily for business and maintain documentation of such. Even worse, telemarketers will be subject to costly litigation because the first chance to rebut the plaintiff-friendly presumption is after the discovery stage. Finally, the ruling left open what evidence is necessary to rebut the presumption, and that lack of clarity may further burden B2B callers seeking to document compliance.

In light of the Ninth Circuit’s ruling, B2B callers should reevaluate their calling compliance policy, considering if it is necessary to scrub business numbers against the national DNC Registry and how to implement scrubbing into calling procedures. B2B callers should also review state DNC procedures as twelve states maintain a state-specific DNC Registry, some of which do not exempt B2B calling. Experienced counsel can help navigate the complex B2B telemarketing legal framework at the federal and state level. Mac Murray & Shuster will continue to provide updates on legal developments regarding B2B telemarketing.