We are all Lucas Cranor.
In June 2018, Cranor made a purchase at a store called 5 Star, and while there, he gave 5 Star his mobile number. As a reward for his patronage, 5 Star sent Cranor a series of unsolicited advertising texts, about both a rewards program and a can’t miss sale. Annoyed to his core, Cranor replied: STOP.
This exchange led to legal threats, which ultimately resolved with a pre-suit settlement of $1,000. But of course, the story did not end there.
Months later, 5 Star went back to the well and sent Cranor another unsolicited text promoting a sale. Cranor again responded “STOP,” and this time 5 Star listened. Nevertheless, Cranor went to court, suing 5 Star and alleging that its one post-settlement text message to him violated the TCPA. According to Cranor, the text at issue caused him “the very harm that Congress sought to prevent [in enacting the TCPA]—namely, a nuisance and invasion of privacy.”
What Did the District Court Do?
The district court dismissed Cranor’s case for lack of standing. It concluded that 5 Star’s one text message to Cranor did “not constitute [an] injury in fact,” because a “single unwelcome text message will not always involve an intrusion into the privacy of the home in the same way that a voice call to a residential line necessarily does.”
Cranor appealed.
How Did the 5th Circuit Rule?
In short, the 5th Circuit found that Cranor has standing to sue over a single text message because he alleged a cognizable injury in fact: “nuisance arising out of an unsolicited text advertisement.” In so ruling, the 5th Circuit looked at Congress’s judgment in passing the TCPA and then considered the history of analogous common law actions.
Congress’s Judgment
The 5th Circuit stated that Congress’s intent could not have been clearer. In enacting the TCPA, Congress found that “unrestricted telemarketing can be an intrusive invasion of privacy” and a “nuisance.” Accordingly, “Cranor’s asserted injury is thus exactly the one Congress sought to remediate in enacting the [TCPA].” And the Court was not convinced—as 5 Star contended—that the TCPA was solely aimed at unsolicited marketing that affects the home. Rather, the court noted how the TCPA expressly covers cell phones and text messages and, in many other contexts, addresses invasions of privacy outside the home (e.g., paging services, emergency lines, and hospitals).
History of Analogous Common Law Actions
Funny enough, the court next took up whether the harm from an unwanted text message “has a close relationship to a harm “that has traditionally been regarded as providing a basis for lawsuit in English or American courts.” At first glance, it is hard to see anything traditional about the harm from a modern day annoying text message. But that did not dissuade the court. To the contrary, the 5th Circuit found that such a harm was very much akin to a harm actionable at common law: public nuisance.
While traditionally “the sovereign would address a public nuisance,” a private citizen could, however, also do so, but only if he “could show that he had suffered damage particular to him and not shared in common by the rest of the public.” The court then used some creative analogy work to explain its reasoning.
- Cranor “wants to use our Nation’s telecommunications infrastructure without harassment.” Thus, he is “similar to someone who wants to use another piece of infrastructure, like a road or bridge, without confronting a malarial pond, obnoxious noises, or disgusting odors.”
- 5 Star is “similar to someone who illegally emits pollution or disease that damages members of the public.”
And Cranor succeeded in alleging a “special harm not suffered by the public at large,” specifically, the receipt of one of 5 Star’s texts, which caused:
- Cranor to read the message;
- Cranor to respond to the message;
- a depletion of Cranor’s phone’s battery; and
- a depletion of minutes allocated to Cranor by his cell phone provider.
Thus, the court found such harm more than sufficient to establish a “close relationship” between his injury and an actionable public nuisance at common law.
***
For companies thinking about marketing through text messages, be forewarned: just one wayward text can confer standing on the recipient to sue you under the TCPA. And once those floodgates open, look out, as the TCPA’s statutory damages range from $500 to $1,500 per violation.
***
Risk Settlements, the industry leader in structuring class action settlements, can help defendants in class action litigation evaluate the litigation options and design an optimal settlement structure that is backed by full risk transfer to an insurer. Risk Settlements offers two insurance solutions for defendants in class action litigation.
- Class Action Settlement Insurance (CASI) provides companies with the certainty they need to get back to business. It is the only product on the market that allows companies to mitigate, cap and transfer the financial risk of settlement in existing class action litigation. Designed by Risk Settlements in response to businesses’ need for financial certainty in class action lawsuits and resulting settlements, CASI eliminates the unintended consequences of settlement and helps businesses exit litigation for a known, fixed cost.
- Litigation Buyout (LBO) Insurance provides companies with the ability to successfully ring-fence litigation exposure and transfer the full financial risk of class action, antitrust, and non-class litigation. With LBO Insurance, the insurance carrier takes on the financial risks and liabilities for businesses – at any time before settlement and for a known, fixed cost. In the context of an M&A transaction or financing, LBO Insurance negates the requirement for the use of escrows or indemnities, providing certainty and finality to both parties to the transaction.
Contact us today to learn more about our creative insurance solutions to resolve existing or ring-fence threatened or existing litigation for a known, fixed cost.