TCPA Existing Business Relationship


The Telephone Consumer Protection Act (TCPA) has been a subject of debate in recent legal proceedings. In a groundbreaking ruling, a federal court has determined that an “established business relationship” can be formed during a call, even if the call itself violates the TCPA. This new interpretation, highlighted in Charvat v. Southard Corp., No. 2:18-cv-190 (S.D. Ohio), challenges the conventional understanding of TCPA violations. This decision has potential implications for class actions seeking certification under Federal Rule of Civil Procedure 23.

Restoring the Balance

The TCPA was designed to strike a delicate balance between fostering a thriving telemarketing industry and shielding consumers from unsolicited calls. However, the proliferation of TCPA lawsuits in the digital media and advertising space has disrupted this equilibrium. A quick internet search reveals numerous seven-figure settlements and judgments in TCPA cases. Southard Corp. serves as a beacon of hope for reinstating the intended balance, particularly concerning calls made to individuals on the National Do Not Call Registry (NDNCR).

The Role of an Established Business Relationship

The TCPA imposes three main restrictions: autodialed or prerecorded calls, unsolicited faxes, and calls to individuals on the NDNCR. Under the “Do Not Call” provisions, calls to registered individuals are prohibited, but there is an exception for calls made to individuals with an established business relationship (EBR). An EBR is defined as a prior or existing relationship formed through voluntary two-way communication within the three months preceding the call, based on an inquiry or application regarding the entity’s products or services. While the terms “voluntary” and “inquiry” lack statutory or regulatory definitions, their common interpretations provide some clarity.

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Establishing an EBR

Consumers have various avenues to create an EBR. The Federal Communications Commission (FCC) deems inquiries as potential EBR triggers when a consumer reasonably expects a follow-up call. The mere act of inquiring about a telemarketer’s products or services can create an EBR, even without an immediate purchase or transaction. Southard Corp. exemplifies this concept.

Unveiling the Southard Case

In the Southard case, the plaintiff alleged receiving seven telephone solicitations from the defendant. During five of those calls, the plaintiff engaged in conversations about the defendant’s services, asking questions that indicated an intent to learn more. Notably, the plaintiff did not express disinterest or object to the calls. Subsequently, the plaintiff initiated a class action against the defendant, contesting the existence of an EBR.

The Court’s Interpretation

The court focused on two key questions to determine whether an EBR had been established. Firstly, it examined whether the relationship formed through a voluntary two-way communication. Despite the plaintiff’s argument that the calls were involuntary due to their NDNCR registration, the court reasoned that the plaintiff actively chose to engage in conversation. Secondly, the court assessed whether the plaintiff made an inquiry or application regarding the defendant’s products or services. While some inquiries were deemed insufficient, one specific question about the warranty qualified as an unambiguous inquiry, creating an EBR.

Seeking Balance and Common Sense

Southard Corp.’s outcome aligns with the TCPA’s intended “balanced approach,” FCC regulations, and common sense. The TCPA defines an EBR as a relationship established through any voluntary two-way communication, regardless of when it occurs. The statute does not limit the EBR exception to pre-existing relationships. Moreover, the legitimacy of a consumer’s interest in the seller’s services should not affect the inquiry’s classification. In the Southard case, the plaintiff’s coy engagement with the defendant, coupled with a warranty inquiry, solidified the presence of an EBR.

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Factors Supporting the Court’s Decision

The court’s determination was bolstered by three relevant factors. First, all calls were recorded, ensuring an accurate depiction of their tone and content. Second, the callers maintained politeness and accommodated the plaintiff’s desired call duration. Lastly, the calls promptly ceased when the defendant received a notice of non-consent from the plaintiff.

Implications for NDNCR Classes

Southard Corp.’s precedent establishes that an EBR can be established through feigned or sincere inquiries into a caller’s products or services. This interpretation aligns with Congress’s intent and could impact the viability of potential NDNCR class actions seeking certification.

To learn more about the TCPA and the importance of establishing an EBR, visit Six Minute Dates.