United States: Arizona Appeals Court Rules that TCPA Applies to SMS

Originally published October 5, 2005

In a unanimous opinion filed on September 20, 2005, a three-judge panel of the Arizona Court of Appeals ruled that the Telephone Consumer Protection Act of 1991 (TCPA) applies to computer-generated text messages originating as e-mail and delivered to mobile service subscribers as SMS (Short Message Service) messages.¹ The court held that sending unsolicited text messages to a phone number violates the Federal Communications Commission’s (FCC) rule prohibiting the use of automatic dialing equipment to call cell phones without prior express consent from the recipient.

Set forth below is a detailed summary of the case. This is believed to be the first case to interpret the TCPA provisions at issue. Companies should be aware of this ruling as they evaluate SMS offerings.

In January 2001 and March 2001, plaintiff Rodney Joffe received unsolicited text message solicitations from Acacia, a mortgage company, on his cellular telephone. The messages were part of a marketing campaign to advertise low interest rates on home mortgages. Acacia programmed computers to send the solicitations as e-mail over the Internet to consumer e-mail addresses. In Joffe’s case, the e-mail took the form of his cellular telephone number plus the domain name of his wireless carrier. When the e-mail reached Joffe’s cellular carrier, it converted the e-mail to a text format that could be delivered to his cellular phone. Acacia was thus able to take advantage of a service provided to Joffe by his cellular carrier, SMS.

Joffe’s complaint alleged that Acacia had violated the TCPA’s prohibition on using "any automatic dialing system" to make "any call" to "any telephone number assigned to a … cellular telephone service." Acacia moved for summary judgment, arguing that the TCPA was inapplicable to e-mail messages. The trial court denied defendant’s motion, concluding that the

sending of e-mail messages to a cellular telephone number for the purpose of delivering unsolicited advertising violated the TCPA.

Following the trial court’s ruling, Joffe moved to certify the case as a class action, alleging that the same promotional messages had been sent to 90,000 cellular telephones. Acacia filed a second motion for summary judgment or, in the alternative, reconsideration. Acacia asserted that the TCPA was intended to cover telephone calls that resulted in two-way interactive communications, not the sending of one-way text messages. Joffe filed a cross-motion for summary judgment.

The trial court, relying on its prior ruling, granted partial summary judgment for Joffe and held Acacia liable under the TCPA. The court also rejected Acacia’s argument that the TCPA violated its First Amendment right to engage in commercial speech.

The Arizona state court of appeals, in considering whether the lower court correctly held that the TCPA applied to Acacia’s conduct, was required to resolve two questions: whether Acacia had "called" Joffe, and, if it had, whether it used an "automatic dialing system" to do so.

Acacia claimed that the TCPA only regulates ordinary telephone calls of the type that present the potential for two-way real-time communication, but not text messages, which do not give rise to the potential for two-way real-time communication, but constitute nothing more than the sending of an e-mail to an e-mail address.

The court held that a text message may constitute a "call" subject to the TCPA if the other requirements of the statute are met. The court, noting that the word "call" is not defined in the TCPA, looked to the plain meaning of the term, and concluded that Congress used the word "call" to refer to an attempt to communicate by telephone. It held that the mere act of making a call, without regard to whether the call has the potential for a two-way real-time voice communication, is sufficient to constitute a call under the TCPA. The court observed that its interpretation of the word "call" is consistent with other provisions of the TCPA, including the prohibition on messages using an artificial or prerecorded voice to a telephone number assigned to a cellular telephone service or to a residential telephone line. Calls using artificial or prerecorded voice messaging systems do not have the potential for two-way real-time voice communication. The appellate court also noted that one of the central purposes of the TCPA was to protect the public from automated calls—calls made by machines without the potential for real-time voice communication.

The court next addressed what it characterized as "the heart of Acacia’s argument"—even if the word "call" is not restricted to two-way voice communications, the company did not "call" Joffe, but only sent an e-mail message to an e-mail address. The court rejected this argument. Even though Acacia’s computers generated messages via the Internet, the e-mail address was made up of Joffe’s 10-digit cellular number and his cellular carrier’s domain name. When the advertising messages arrived at the carrier, they were converted to a format that could be displayed on a cellular telephone, SMS. The appellate court agreed with the trial court’s conclusion that Acacia "called" Joffe, within the meaning of the TCPA, by initiating a demand to make a connection for the purpose of delivering an advertising message by telephone.

Acacia’s argument that its conduct was not within the scope of the TCPA because it merely sent an e-mail message to an e-mail address and did not use an "automatic telephone dialing system" was rejected by the court. The court noted that Acacia did not dispute that its computers randomly or sequentially produced telephone numbers. Acacia took advantage of an e-mail to SMS capability offered by Joffe’s carrier to reach Joffe’s cellular telephone. Even though the method used to dial a cellular telephone number was attenuated, and even though the particular technology used by Acacia did not exist when the TCPA was enacted, the scope of the statute is not limited to a particular technology. Rather, the court concluded, the TCPA was intended to prohibit calls made to cellular phones using "any automatic telephone dialing system."

The court of appeals also rejected Acacia’s argument that Congress intended that the CAN-SPAM Act of 2003, and not the TCPA, apply to unsolicited commercial messages to cellular phones. The court noted that Congress, in Section 14(a) of the CAN-SPAM Act, clearly stated that nothing in the CAN-SPAM Act "shall be interpreted to preclude or override the applicability of [the TCPA]." Although the legislative history of the CAN-SPAM Act includes statements by some members of Congress indicating their belief that the CAN-SPAM Act was the first legislation to attack unwanted text messages to cellular phones, none of them mentioned the TCPA or expressed an opinion about its applicability to text messages.

Finally, the court rejected Acacia’s claim that the FCC took the position that the TCPA is not broad enough to cover Internet-to-phone text messages. On the contrary, the court observed, the FCC’s 2004 decision to regulate prospectively Internet-to-phone SMS messages under the CAN-SPAM Act does not mean that the TCPA was not applicable to Internet-to-phone SMS calls placed in 2001. Moreover, according to the court, even if the FCC had taken that position, the plain language of Section 14(a) of the CAN-SPAM Act preserving the applicability of the TCPA would override any contrary interpretation by the FCC.

The court rejected Acacia’s argument that the TCPA violates its rights under the First Amendment to the United States Constitution and rejected Acacia’s claim that Congress did not articulate any applicable governmental interest. The court concluded that even though Internet-to-phone SMS could not have been anticipated at the time the TCPA was enacted, Congress intended the TCPA to apply to advances in automatic telephone dialing technology and to the use of that technology to disrupt the privacy of residential (and business) telephone subscribers. The court found that, in protecting the privacy of cellular telephone subscribers from automated calls, the TCPA serves a significant governmental interest. The court went on to conclude that by prohibiting only those calls from automatic dialing systems, Congress narrowly tailored the TCPA to achieve its objective of protecting the privacy of telephone subscribers, and that Acacia could have reached the same subscribers without violating the TCPA through various means, including entry of the telephone numbers by hand (i.e., phone-to-phone SMS).

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