TCPA Class Action Judgment: Dual Purpose Nonprofits – Telecom, Mobile, Cable Communications

The TCPA “non-commercial exemption” may not apply to non-commercial entities that (1) act on behalf of commercial entities and/or (2) have both commercial and non-commercial purposes.

In this putative class action, plaintiffs challenge defendants’ alleged practice of making unsolicited telemarketing calls to individuals whose phone numbers are on the national Do Not Call Registry (“DNC”). . Defendant operates a non-profit enterprise and “claims to provide credit counseling services and debt management plans on a non-profit basis.” Plaintiff alleges that another entity (1) provides back-office and administrative services to Defendant, (2) manages Defendant’s telemarketers, and (3) derives income from Defendant’s telemarketing activities. . Pinn v. Consumer Credit Counseling Foundation, Inc.No. 22-cv-04048, 2023 WL 21278 (ND Cal. 3 January 2023).

Plaintiffs asserted class action claims under the Telephone Consumer Protection Act, 47 USC § 227(c)(5) (“TCPA”). Defendant moved to dismiss because the call was to facilitate Defendant’s tax-exempt, non-profit “debt counseling service.” By analyzing the dual commercial and non-commercial purposes of the nonprofit’s communications, the district court dismissed this motion and allowed the case to proceed.

• Regulation of TCPA: TCPA allows “[a] Any person who receives more than one call in any 12-month period by or on behalf of the same entity in violation of the rules set forth in this subsection shall be entitled to injunctive relief. and/or sue for actual or statutory damages. $500 per violation. 47 USC § 227(c)(5).[n]o The individual or entity must initiate a telephone solicitation. [a] Residential telephone subscribers who have their telephone numbers on the national do-not-call register of persons who do not wish to receive telephone solicitations maintained by the federal government.” 47 CFR § 64.1200(c)(2). This prohibition also applies to wireless telephone numbers. 47 CFR § 64.1200(e).
  Telephone Solicitation “does not include calls or messages… [b]y or on behalf of a tax-exempt non-profit organization47 CFR § 64.1200(f)(15)(iii) (emphasis added).

• 2003 FCC Directive: The Federal Communications Commission (“FCC”), in its 2003 order, expresses concern about calls made jointly by non-profit and for-profit organizations.has been frequently used to cover up what is actually a commercial venture.” In Re Rules & Reguls. phone implementation.Consumer Protection Act 1991, 18 FCC Rcd. 14014, 14087-88 (2003) (emphasis added).

• 2005 FCC Directive: The FCC, in its 2005 order, states:[i]n status Even if a call is initiated by a commercial entity to sell its own or another commercial entity’s products, and the tax-exempt non-commercial entity receives a portion of the sales proceeds, such calls are considered TCPA.” In a matter of rules and rules. phone implementation.Consumer Protection Act 1991, 20 FCC Rcd. 3788, 3800 (2005).

• Massaro/PETA dominate: of Massaro v. Beyond Meat, Inc., 3:20-cv-510, 2021 WL 948805, at *6 (SD Cal. March 12, 2021), Court ruled at petition stage that nonprofit exemption does not apply to nonprofits – People for the Ethical Treatment of Animals (“PETA”) – for sending marketing text messages promoting alternative animal foods because the text messages were dually crafted for commercial and non-commercial purposes may be held liable under the TCPA. PETA denied receiving compensation from Beyond Meat for its marketing messages, but the court was obligated to accept the allegations as true for purposes of its motion to dismiss. See also Aranda v. Caribbean Cruise Line, Inc., 179 F. Sapp. 3d 817, 828 (ND Ill. 2016) (analyzing another TCPA exemption for non-commercial calls).

In short, courts do not automatically dismiss TCPA cases against nonprofits, but instead analyze the commercial and noncommercial purposes of communications.

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