On The Phone: Federal Scrutiny for Nonprofit Communications and Consent
January 10, 2019 Eric Berman
A federal district judge dismissed a putative class action lawsuit alleging violations of the Telephone Consumer Protection Act (TCPA) by charities. Even for telemarketers and TCPA practitioners, Reese v. Anthem, Inc., might be easy to overlook. The decision is barely 10 pages long. It was issued by a court in Louisiana, hardly the TCPA litigation hotbed of California, Illinois, and Florida. And, two of the three defendants were 501(c)(3) charities, rare targets of TCPA litigation.
The Reese decision in U.S. District Court for the Eastern District of Louisiana is worth noting, however. On the merits, the court’s analysis provides some useful judicial gloss on the issues of TCPA consent and the distinction between commercial and informational communications.
Perhaps more importantly, Reese follows on the heels of other cases, such as Wengle v. DialAmerica Marketing, Inc. and Spiegel v. Reynolds et al., that might foreshadow more aggressive efforts by the plaintiffs’ bar to assert TCPA claims against nonprofit organizations and their for-profit partners or agents.
For years, Anthem Foundation, Inc,. has supported the American Heart Association (AHA) and its “Hands-Only CPR” campaign to help people respond to a cardiac arrest event. Anthem Foundation is a 501(c)(3) charitable organization that serves as the philanthropic arm of forprofit insurance company Anthem, Inc. The plaintiff in Reese admitted that she had provided her cellular phone number to AHA to receive “monthly CPR reminders, healthy messaging information, and [questions from AHA].”
According to her amended complaint, though, the plaintiff and unnamed class members allegedly were “bombarded” with unwanted text messages that contained only “vacuous” pieces of medical information. Moreover, because the text messages stated “AHA/Anthem Foundation” and because Anthem Foundation’s name and logo appeared on AHA’s Hands-Only CPR web pages, the plaintiff argued that the ostensibly informational text messages actually served as pretexts for an advertising campaign benefitting Anthem, Inc. and Anthem Foundation.
The crux of the plaintiff’s TCPA theory was that while she voluntarily consented to receive informational text messages from AHA she never consented to receiving text messages from Anthem Foundation and, by extension, Anthem, Inc.
The court, however, rejected plaintiff’s arguments and granted defendants’ motion to dismiss with prejudice.
Plaintiff consented to receiving the texts about which she complained. The court explained that an individual provides prior express consent to be called or texted at the number provided when (1) she has provided her number to the calling/texting party, and (2) there is some relation between the communications and the reason for which she provided her number. In Reese, it was undisputed that the plaintiff provided her phone number to AHA. As to the second prong, the court held that the plaintiff received precisely the type of text messages that she signed up for: communications about CPR and healthy living.
Plaintiff’s assertion that she had not consented to receiving text messages from Anthem Foundation was firmly rejected. It was “irrelevant,” held the court, that AHA’s text messages referenced Anthem Foundation. “[T]he sender was, in fact, AHA” and “Plaintiff has not cited any persuasive cases that says a nonprofit’s association with a donor or another charitable entity — i.e., Anthem Foundation — gives rise to a TCPA claim when she voluntarily sought to receive certain communications and information.”
Charitable partnerships with forprofit entities do not necessarily render the communications commercial. Throughout her complaint, the plaintiff characterized AHA’s texting program as a commercial advertising endeavor (orchestrated by Anthem and Anthem Foundation) masquerading as charitable communication. She accused AHA of “rent[ing] out advertising space in each of its text messages … to spread brand awareness” of other companies’ products and services. She also alleged that Anthem’s support of AHA was intended to enhance Anthem’s positive visibility with consumers to “increas[e] its bottom line.”
The court disagreed. The text messages did not disseminate information about purchasing insurance, and links to CPR course providers (whether for-pay or free) did not convert the texts into commercial messages.
Like Wengle and Spiegel before it, Reese repels a plaintiff’s attempt to attach TCPA liability to a nonprofit organization because that nonprofit worked with a for-profit entity to disseminate its message. Wengle made clear that a forprofit telemarketer is not disseminating its own commercial message simply because it is compensated by a charity to raise funds and spread information about that charity.
Spiegel went even further, holding that a for-profit charitable fundraiser may still qualify for the TCPA’s nonprofit exemption even if it collects as a fee a majority of the donor’s contribution to the charity.
Wengle, Spiegel, and now Reese demonstrate courts’ recognition that nonprofit organizations frequently contract with for-profit companies to their mutual benefit. These decisions – correctly — show a judicial reluctance to ascribe a sinister profit motive to these arrangements such that their conduct would constitute commercial telemarketing under the TCPA.
TCPA challenges involving nonprofit organizations are likely not over. A recent study by the U.S. Chamber of Commerce’s Institute for Legal Reform shows that TCPA litigation is rarely directed at charities. However, Reese’s attorney told the legal press that “[i]t is important to test the boundaries of the TCPA, as we did in this case.”
Similarly, Spiegel’s counsel had said that his lawsuit was intended to “shine a light on the [TCPA’s] nonprofit exemption” and he opined that the scope of the TCPA’s reach should be given “more scrutiny.”
Indeed, Spiegel has appealed the dismissal to the Seventh Circuit. As charitable organizations increasingly work with for-profit entities, whether in a purely fundraising capacity or as part of a commercial co-venture or other arrangement, they should be mindful of this as they devise outreach programs via text and call campaigns to consumers and potential donors.
Eric Berman is a partner in Venable LLP’s Washington, D.C. office and practices with the firm’s advertising and nonprofit groups. He served as lead counsel to the professional fundraiser that was granted summary judgment in Spiegel v. Reynolds. His email is esberman@Venable.com