Donald Yarbrough
Donald Yarbrough (Melanie Bell)

FREDY D. OSORIO, PLAINTIFF, V. STATE FARM BANK, DEFENDANT

Case No.: 13-10951

Date: March 28, 2014

Case type: U.S. Telephone Consumer Protection Act

Court: U.S. Court of Appeals for the Eleventh Circuit

Author of opinion: Judge Ronald Lee Gilman, Sixth Circuit, sitting by designation

Lawyers for petitioner: Donald A. Yarbrough, Donald A. Yarbrough Esq., Fort Lauderdale, and Gregory Andrew Beck, Gupta Beck, Washington

Lawyers for respondent: Aaron Stenzler Weiss and Paul L. Nettleton, Carlton Fields Jorden Burt, Miami

Panel: Circuit Judges Gilman and R. Lanier Anderson and U.S. District Judge Inge Prytz Johnson, Northern District of Alabama, sitting by designation

Originating court: Middle District of Florida

Giving a pro-plaintiff tilt to a crucial part of the U.S. Telephone Consumer Protection Act, the federal appellate court for Florida, Georgia and Alabama revived a case that resounds with hundreds of autodialed calls.

Clara Betancourt didn’t dispute she owed State Farm Bank more than $8,355 in overdue credit card payments for auto insurance, although she blamed a 24 percent interest rate. She has disputed representing as her own cell phone the personal cell of her longtime housemate Fredy Osorio, with whom she has a grown son.

After getting 327 robocalls from a debt collection agency, Osorio sued State Farm for damages under the federal Telephone Consumer Protection Act, a law restricting unwanted phone calls to consumers. State Farm countersued Betancourt and won summary judgments against both parties that could have put her on the hook for more than $137,000.

On March 28 the U.S. Court of Appeals for the Eleventh Circuit removed her from that hook, at least temporarily, by setting the litigation back on track for trial in the Middle District of Florida.

The court quoted the late Sen. Ernest “Fritz” Hollings, D-S.C., who introduced the TCPA in 1991, calling autodialed calls “the scourge of modern civilization. They wake us up in the morning; they interrupt our dinner at night; they force the sick and elderly out of bed; they hound us until we want to rip the telephone out of the wall.”

Growing Practice

Although the TCPA is 23 years old, it wasn’t until 2012 that the private cause of action captured the consumer bar’s attention, Osorio’s trial lawyer Donald Yarbrough said. That year the U.S. Supreme Court ruled in Mims v. Arrow Financial Services that aggrieved parties can bring TCPA claims in both state and federal courts.

“There’s been an increase in the number of suits since the Mims ruling,” said Yarbrough, a Fort Lauderdale solo practitioner who has handled several of them. The lead attorney in the Osorio appeal was Gregory Beck of Gupta Beck in Washington, D.C., which Yarbrough described as one of the premiere consumer law appellate firms.

Lawyers from the D.C. office of Bryan Cave wrote in September 2013 that TCPA suits have been described as “dominating” the field of consumer class action litigation.

In the first half of 2013, 55 plaintiff firms filed 40 putative class action complaints, the researchers found. The cases “congregate in the federal and state courts of California and Florida,” according to the study by Megan Gajewski and David Zetoony.

“Complaints overwhelmingly focus on an alleged failure to obtain consumers’ prior consent,” they wrote.

Addressing this problem, the Federal Communication Commission activated a rule in October requiring companies to obtain written consent before they employ autodialing technology to contact consumers’ mobile phones.

With companies’ use of automatic text messaging on the rise, the new rule “is likely to lead to additional class action litigation,” the Bryan Cave lawyers predicted.

Disputed Consent

Who walks away with how much money from the Osorio v. State Farm case is all bound up with the issue of consent.

Osorio and Betancourt argued that she gave out his number only as a work or emergency contact. Soon after Osorio started getting dunning calls for Betancourt, he revoked whatever consent existed by telling State Farm’s agent to “Please stop calling.”

State Farm argued its records showed Osorio’s number to be Betancourt’s, and Betancourt expressly consented to the calls because she lives with Osorio, had a son with him, and they share a Metro PCS cell-phone plan listed in his name.

U.S. District Judge Donald Middlebrooks found State Farm’s argument more compelling.

“[I]f Osorio could sue State Farm for over $75,000 because the woman with whom he cohabitates and had a child with provided ‘his’ number to State Farm on multiple occasions, debt collectors would be held liable whenever a debtor lists a family member’s number as his own,” Middlebrooks wrote.

In reversing him, the Eleventh Circuit applied the common law of agency. State Farm must prove that Betancourt had a relationship with Osorio that allowed her to consent to his receiving the calls by giving out his number, the court held.

The key facts regarding agency are disputed and must be resolved by a jury, the court concluded. It’s not enough that Betancourt and Osorio form a family unit.

“Parents and cohabitants everywhere would be shocked to learn that every adult in their household is legally entitled to consent to having autodialing debt collectors call any of their cell phones,” Judge Ronald Lee Gilman wrote for the panel.

If Osorio prevails he likely will receive damages of $500 per call, totaling $163,500, Yarbrough said.

Damages are trebled if the calls are willful or knowing, but few courts have imposed them, he said. “Typically the prevailing party recovers the minimum.”

The issue of whether Betancourt can be held liable for some or all of State Farm’s attorney fees is one of first impression in the Eleventh Circuit, Yarbrough said.

He said the court “suggested that large fees may not be appropriate when the caller knew after the first few calls they were calling the wrong number.”

“The debt collector has avenues for recovery besides making robocalls,” Yarbrough said. A human could call, a letter could be sent, a lawsuit could be filed.

“But Congress has established the TCPA and has apparently done so based on its belief that these calls are intrusive of a person’s privacy, regardless of whether or not they’re indebted.”