By Kaitlyn Kozlowski
Overview
This document outlines the allegations and settlement of a class action lawsuit against the Chicago Cubs for violating the Telephone Consumer Protection Act (TCPA) by sending unsolicited marketing text messages and recommends action to sports organizations for risk management to reduce legal and reputational problems.
One, Two, Three Strikes, Your Turn to Pay!
The facts and timeline of Lateano v. Chicago Cubs is as followed. The class period for this case began on May 2, 2019. The lead plaintiff, Colin Lateano’s specific timeline began on July 21, 2022, when he unsubscribed from the Chicago Cubs marketing text messages with a request (“STOP”).[1] From July of 2022 to February 2023, Lateano received multiple marketing text messages from the Chicago Cubs promoting ticket sales and upcoming events, despite requesting the Cubs to stop sending him promotional texts. The promotional text messages received during the class period led to Lateano filing a class-action lawsuit against the Chicago Cubs on May 2, 2023. The class-action lawsuit was filed in the United States District Court for the Northern District of Illinois. His allegations against the Chicago Cubs centered around the Cubs’ violation of the Telephone Consumer Protection Act (TCPA) for sending him and others in the class unsolicited text messages after the “STOP” requests. Lateano, on behalf of the class, sought statutory damages of $500 for each violation, or up to $1,500 for each willful and knowing violation. On June 23, 2023, the Chicago Cubs responded to the class’s complaint by denying all allegations and providing evidence in their defense. In this response, the Cubs admitted to sending certain messages to Lateano but denied violating the TCPA. The Cubs denied Lateano’s claim they did not have do-not-call request procedures in place, claiming the procedures were “established and implemented, with due care”.[2] The Cubs also relied heavily on the class being subject to binding arbitration based on their agreement to MLB.com’s Terms of Use which includes an explicit arbitration clause.[3] After receiving the evidence and response, the court scheduled time for discovery around the alleged claims possibly being subject to binding arbitration through MLB.com. Between the dates of July 26 and October 12, 2023, the plaintiff class and defendant exchanged information and agreed to mediation for the class. The mediation was held on October 12, 2023, with retired judge Thomas Rakowski and members of each party. A settlement was reached, and the settlement amount was negotiated until January 10, 2024.
On January 24, 2024, head plaintiff Colin Lateano filed for preliminary approval of the class settlement. The judge, Joan B. Gottschall, initialed denied the motion for approval and requested more information to ensure a fair settlement. On March 6, 2024, the preliminary approval was granted by the court, defining the class who qualified for a portion of the settlement. A website was created for any class members to be notifying and given information.[4] The site provided key information and dates of the trial and case, along with deadlines to opt-out or object the settlement. On June 17, 2024, the final approval hearing took place to ensure the settlement was fair for the class members. The total settlement for the class was $1,205,000. This settlement was broken into three separate parts. Colin Lateano was rewarded $10,000 for acting as the lead plaintiff for the class members. The legal team was rewarded $430,706.16for representing the class and $8,481.43 for reimbursement for their fees throughout the case. The remaining amount was distributed between 2,486 class members, equating to approximately $300 per class member. The class members received their portion through checks or electronic transfers.[5]
TCPA Cases in Sport and Beyond
This memo will further explore the key parts of the Telephone Consumer Protection Act (TCPA) and class action lawsuits in the context of sports leagues and teams to provide recommendations and practices for teams to avoid similar lawsuits. Since the increase of technology and social media use, TCPA lawsuits have become a growing concern for organizations and businesses who use text and digital strategies to connect with their consumers. In 1991, TCPA, Act 47 U.S.C., Sec. 227 placed restrictions on telemarketing practices and the use of telephones to protect consumers from receiving telemarketing communication without explicit consent.[6] To ensure compliance with TCPA, any individual, business, or entity using telemarketing must adhere to the following requirements – call time restrictions (8:00am-9:00pm), maintenance of a Do Not Call list, and procedure to gain explicit consent from consumers before sending any communication.[7] The TCPA has a strict liability statute with penalties as high as $500-per-violation and $1,500-per-violation for willful violation.[8] Due to the increase in number of class action lawsuits, TCPA lawsuits have ended in large settlements for entities in violation.
Most TCPA cases become class action lawsuits when a case is filed by one or a few people on behalf of the larger “class” who has been similarly harmed.[9] The cases, like in the case of Lateano v. Chicago Cubs, commonly revolve around the rights of consumers. The class representatives must file the case and request the certification of the class through showing evidence of commonality in the legal issues and a significant number of individuals affected and eligible for the class. Once confirmed, the class members are notified once there has been certification and have the option to join the case or opt-out.In most TCPA cases, the settlement is arranged and submitted to the court for approval. If a settlement cannot be reached, the case goes to trial and the court makes the final decision on damages for the class. Once the settlement is confirmed, the class is compensated in monetary or the relief form decided.
Many sport organizations have faced similar litigation with TCPA violations. The Tampa Bay Lightning settled a $2.25 million dollar class action lawsuit for sending unsolicited text messages in 2020. The class members claimed the Lightning sent messages to their mobile devices even though they had not consented to further communication.[10] This case is like many other TCPA cases brought against sport organizations due to unsolicited messages from marketing departments. Much like the Lateano case, there was a preliminary approval, notice for the class members, and final approval hearing to approve the settlement. The Buffalo Bills were similarly sued for sending promotional messages to consumers without explicit consent.[11] Much like the Cubs case, the outcome was a multi-million-dollar settlement. These cases are necessary for reference when understanding and creating procedures to ensure compliance of TCPA. Each case shows the need for organizations to obtain explicit consent from consumers for marketing messages, organize their consumer data accordingly and check the procedures and systems used to send marketing communications. The sport specific TCPA cases highlights the growing number of class action lawsuits for TCPA violations and the high financial risk of settling TCPA lawsuits.
Recent rulings in TCPA cases beyond the sport industry continue to raise the need for compliant marketing procedures to communicate with consumers. The court ruled in Reimer v. Kohl’s, Inc (2023) that the Do Not Call (DNC) Provision does apply to text messages.[12] Reimer’s arguments were like Lateano’s as the plaintiff unsubscribed from Kohl’s text messaging then continued to receive messages. The do-not-call provision is stated explicitly as “telephone solicitations” but the court decided, based on the FCC’s Notice of Proposed Rulemaking that the provision extends to text messages.[13] The Federal Communications Commission (FCC) is the United States government agency that enforces and regulates communications to serve the public interest. The agency plays a crucial role in implementing rules and enforcing compliance of TCPA in the United States. The rules created by the FCC have been used in courts to interpret and apply TCPA in several cases. The FCC has recently been under fire to work on clear rules for reference and rulings.[14] With the increase in cases, there is major pressure on FCC and the courts to provide a clear outline for TCPA cases, especially as social media use continues to be a factor in many class action lawsuits. The ruling is a message and reinforcement to organizations that it is necessary to honor opt-out and do-not-call requests to avoid TCPA violation.
The precedent set by Facebook, Inc. v. Duguid et al is another case for reference when looking at the evolving landscape of TCPA. Many TCPA claims arise from the use of an automatic telephone dialing system (ATDS). The use of ATDS systems is primarily for alert systems but can also be used for telemarketing purposes.[15] After Duguid’s ruling in 2021, the number of TCPA filings significantly dropped with the Supreme Court’s ruling narrowing the scope of the split interpretation of TCPA.[16] When TCPA was passed in 1991, the technology for text messaging was not yet created and many courts have used protocols regarding “calls” to address cases involving text messages.[17] Duguid made its way to the Supreme Court where the court disagreed with the Ninth Court’s ruling, favoring Facebook and their argument they were compliant with TCPA. The decision by the Supreme Court narrowed the definition of an automatic telephone dialing system and in effect limited claims that are based on automated calls or texts sent from systems that do not randomly dial numbers.[18] While this ruling may change the overall rules and procedures of TCPA, the ruling did not affect privacy claims such as Lateano’s do-not-call request and the unsolicited messages that followed. After the Duguid ruling, many states created legislation to make sure consumers were protected. Eight states, including Florida, Maryland, and Washington passed laws to protect consumers against telemarketing.[19]
What’s Next for Marketing Practices
As technology and social media continue to be an integral part of society, there is increased communication about shared experiences between fans and consumers. There has already been an increase in class action lawsuits filed over the last several years and it is seemingly the tip of the iceberg. In Juul Labs, Inc. Marketing, Sales Practices & Products Liability Litigation (2019), the class action publication reached over 409 million impressions, generating over eight million claim forms.[20] With the popular strategy of using data to create text and digital promotions, there needs to be clear procedures and technology in use for organizations to avoid potential lawsuits with TCPA violations.
With the requirement of prior explicit consent before sending telemarking communications to consumers, organizations must have clear, documented procedures to obtain the consent of consumers. By having an explicit opt-in mechanism, the consumer must take action to give consent to telemarketing communications. Some examples of opt-in procedures are checkboxes, opt-in text messages, and confirmation of given consent. A checkbox is a clear action taken by a consumer to agree to marketing communications by text, email, or phone. This action should be stored in a specific list for reference if a TCPA violation claim arises. For mobile opt-in procedures, there should be a confirmation message and a follow-up to once again confirm the consumer’s agreement to telemarketing communications. Common industry practices include having the consumer respond “YES” or “STOP” to the initial message. Each following telemarketing communication should include the right to opt-out for the consumer, commonly “Reply STOP to opt-out”. By strengthening procedures for consent, the evidence can be used as defense against TCPA violations when the organization proves explicit consent through valid evidence.
With the increase of content and third-part company use, there is a need for explicit TCPA compliance in the contracts before data is shared. This technology needs to be used in accordance with TCPA to ensure the consumer data is being used in compliance. There should be quarterly meetings or check-ins with the third-party company to keep the organization in compliant with TCPA regulations. These check-ins should include any new campaigns that collect consumer data, in addition to checking the opt-in/out processes for compliance and effectiveness. In addition to explicit TCPA terms in the contract, the organization’s data policy should be provided. This allows the organization to keep their third-party vendor in compliance and show the clear terms in court as needed. With the increase in class action lawsuits and TCPA violations, sport organizations need to be prepared and proactive for any potential claims. This includes having accessible data if needed to show legal compliance. The records, specifically the consent records, should be clearly organized and maintained for review. The organization must also ensure the TCPA, and marketing practices are accessible to employees and any third-party vendors who are working on marketing communications. To have explicit compliance and organized data, organizations should use software like customer relationship management systems. This creates a centralized database of consumer data and allows organizations to easily track when a consumer opts in to marketing communications, interacts with communications, and/or unsubscribes. The system should be included in the quarterly checks for compliance and efficiency. While these systems may be costly, the organization and accessibility of the database will allow organizations to decrease their risk of lawsuits if effectively managed.
Important Takeaways
The impact of social media has increased the risk for TCPA allegations as consumers communicate across channels and share their experiences. The allegations and settlement of the Lateano case serves as a warning to sport organizations as they refine and build their marketing practices. By developing and implementing software and procedures to stay compliant with TCPA, organizations can reduce the risk of similar legal difficulties and build trust with their consumers. As sport organizations continue to grow and build their fanbases, it is important to understand TCPA and the best practices to organize consumer data. In the coming years, there must be close consideration for similar cases, rules, and precedents surrounding TCPA.
[1] Colin Lateano v. Chicago Cubs Baseball Club, LLC, No. 1:23-cv-02757 (N.D. Ill. May 2, 2023).
[2] Defendant’s Answer, Lateano v. Chicago Cubs Baseball Club, LLC, No. 1:23-cv-02757 (N.D. Ill. May 2, 2023).
[3] Id. at 10
[4] Cubs TCPA Settlement. (n.d.). Cubs TCPA Settlement. https://www.cubstcpasettlement.com
[5] Settlement, Lateano v. Chicago Cubs Baseball Club, LLC, No. 1:23-cv-02757 (N.D. Ill. May 2, 2023).
[6]Do Not Call Registry. (n.d.). What is TCPA? Do Not Call Registry. Retrieved December 2, 2024, from https://www.dnc.com/what-is-tcpa/
[7]Telephone Consumer Protection Act, 47 U.S.C. § 227
[8]TCPA, 47 U.S.C. § 227
[9] Legal Information Institute. (n.d.). Class action. Cornell Law School. Retrieved December 2, 2024, from https://www.law.cornell.edu/wex/class_action
[10] Hanley v. Tampa Bay Sports & Entm’t, LLC, No. 8:19-cv-00550-CEH-CPT (M.D. Fla. Jan. 7, 2020).
[11] Wojcik v. Buffalo Bills, Inc., No. 1:20-cv-01257 (W.D.N.Y. Oct. 5, 2020)
[12] Reimer v. Kohl’s, Inc., No. 23-CV-597-JPS, 2023 WL 6076424 (E.D. Wis. Sept. 21, 2023).
[13] id.
[14] Federal Communications Commission. (2014, March 25). TCPA: It’s time to provide clarity. Federal Communications Commission. https://www.fcc.gov/news-events/blog/2014/03/25/tcpa-it-time-provide-clarity
[15] Datko, S. (2020, October 23). What is a telemarketing auto-dialer? Top Class Actions. https://topclassactions.com/lawsuit-settlements/tcpa/what-is-a-telemarketing-auto-dialer/
[16] Facebook, Inc. v. Duguid, 592 U.S. 395, 141 S. Ct. 1163 (2021).
[17] Institute for Legal Reform. (2024, April). Expanding litigation pathways: The rising threat of litigation in the U.S. Institute for Legal Reform. https://instituteforlegalreform.com/wp-content/uploads/2024/04/ILR-Expanding-Litigation-Pathways-April-2024.pdf
[18] Facebook, Inc. v. Duguid, 592 U.S. 395, 141 S. Ct. 1163 (2021).
[19] Blank Rome LLP. (2023, July 21). Keep telemarketing compliance top of mind: State law roundup. Blank Rome LLP. Retrieved December 2, 2024, from https://www.blankrome.com/publications/keep-telemarketing-compliance-state-law-roundup
[20] Order For Certification, In re Juul Labs, Inc., Marketing, Sales Practices, and Products Liability Litig., No. 19-md-02913-WHO, 2020 WL 1974131 (N.D. Cal. Apr. 24, 2020), https://www.juulclassaction.com/Content/Documents/Final%20Approval%20Order.pdf.
