The Third Circuit Court of Appeals issued an opinion in October that could drastically expand the already swollen ranks of consumer claimants under the Telephone Consumer Protection Act. It could also make it much more difficult for businesses to successfully defend against such claims in the early stages of litigation. 

The court in Leyse v. Bank of America, N.A., held that statutory standing under the TCPA extends to any actual recipient of an automated call who falls within the TCPA's protected "zone of interests" – including mere inadvertent recipients or those simply answering a phone on behalf of another. 

Collection professionals and others that rely on automated dialing processes should evaluate whether their internal policies provide enough protection against potential TCPA liability, including liability to inadvertent call recipients such as the plaintiff in Leyse

The TCPA was enacted to protect the privacy of residential telephone subscribers by prohibiting unsolicited, automated telephone calls made to home phone lines. 

Section 227(b)(1)(B) of the TCPA prohibits parties from “initiat[ing] any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party . . . .”  

Section 227(b)(3) of the TCPA creates a private right of action for "a person or entity" to enjoin violations and to recover the greater of plaintiffs' actual monetary loss or $500 in statutory damages, per violation. Treble damages are available for knowing or willful violations.

The TCPA has opened the flood gates of opportunity to lawyers that specialize in plaintiff consumer actions and courts are grappling with numerous TCPA related issues including standing.  

As recently as 2007, there were only 14 claims filed under the TCPA nationwide. By 2015 that number had exploded to 3,710 separate claims brought for alleged violations of the TCPA. 

That represents a 45% increase over the previous year's filings. Of those 3,710 claims filed in 2015, 23.6% were filed as putative class actions. Among the top 10 jurisdictions for filing these claims is the U.S. District Court for the District of New Jersey, where the Leyse v. Bank of America case originated.

In Leyse, a marketing company promoting Bank of America credit cards placed a prerecorded marketing call to a residential line owned by plaintiff's roommate, Genevieve Dutriaux. Plaintiff Mark Leyse was neither the intended recipient of the call, nor a registered subscriber on the line, but was a customary user of the phone. 

Based on this single March 2005 call, Leyse and his roommate each filed separate putative class actions in multiple federal district courts, engaging in what one district judge characterized as "blatantly inappropriate" forum shopping.

In the action filed by Leyse in the District of New Jersey, Bank of America moved to dismiss, arguing that because Leyse wasn’t the intended recipient of the call, he didn’t qualify as the called party under the TCPA and thus lacked statutory standing to sue. 

The plaintiff opposed, contending that standing under the TCPA isn’t limited to the intended recipient, but rather to any person or entity receiving a call. 

U.S. District Court Judge Susan Wigenton rejected the plaintiff's argument and granted Bank of America's motion to dismiss, reasoning that "statutory standing to bring a private cause of action under the TCPA requires reference to the prohibited acts," and that the provision allegedly violated in Leyse's case prohibited placing automated telephone calls"without the prior express consent of the called party."

The court held that, as an unintended and incidental recipient of the call, Leyse wasn’t the called party and therefore lacked statutory standing under the TCPA. 

The court noted that "to hold business callers liable for unintended communications would exponentially expand the number of potential plaintiffs and would unfairly impose liability on such callers when acting in good faith to comply with the provisions of the TCPA."

On appeal, the Third Circuit reversed, deciding as an issue of first impression in the Third Circuit – or in fact any other circuit – who is entitled to sue for violations of the TCPA. The court noted that district courts throughout the country have split over this issue, summarizing the various camps as follows: 

Some district court cases hold that statutory standing is limited to the "called party," which they define as the "intended recipient" of the call [citing cases in D.N.J. and S.D.N.Y.]. Others indicate that statutory standing is limited to the "called party" but define that term as the "subscriber" or "regular user" of the phone [citing cases in M.D.Fla. and C.D.Cal.]. Several cases do not invoke the statutory term "called party" but nevertheless find it prudent to limit statutory standing to the "subscriber" or "primary user" [citing cases in S.D.Fla. and S.D.Cal.].  And many cases reject the "called party" approach on the ground that the Act authorizes any "person or entity" to sue [citing cases in S.D.Fla., M.D.Fla., N.D.W.Va., E.D.Mo., N.D.Ala., E.D.Mich., N.D.Ill., and E.D.Pa.]. 

Addressing the district court's ruling in Leyse, the Third Circuit rejected the idea that the caller's intent circumscribes standing. 

Instead, the court employed a "zone of interests" test, borrowed from the U.S. Supreme Court's decision in Lexmark International Inc. v. Static Control Components Inc., in which the Supreme Court sought to determine the scope of statutory standing under the Lanham Act.  

Applying this "zone of interests" test, the Third Circuit examined the text of the TCPA and congressional findings made at the time the Act was passed, and concluded that it isn’t just the intended recipient of a call, but the actual recipient, intended or not, who “suffers the nuisance and invasion of privacy" that the TCPA was intended to remedy.  

The court found that as an occupant of the residence and customary user of the phone line in question, Leyse had "the sort of interest in privacy, peace, and quiet that Congress intended to protect."

The court cautioned that not every visitor, house guest, or stranger asking to use the phone will fall within the TCPA's "zone of interests." Instead, it placed the focus on the subjective connection between the individual answering the phone and the phone owner, such that non-transient occupants of the residence are protected. 

Still, the court's apparent exclusion of house guests and visitors from the TCPA's "zone of interests" draws a purely subjective line in the sand that is susceptible to a liberal shift in favor of expanding standing. 

Even without such a shift, the line as currently drawn widens the scope of TCPA standing for non-intended called parties and increases the potential for inadvertent liability for callers, despite good faith efforts to comply with the statute. 

The Third Circuit attempted to address these concerns in its opinion, observing that prior consent of the "called party" is a defense to liability. The court noted that a caller may invoke the consent of the called party as a defense even if the plaintiff is someone other than the 'called party. 

It further cited a recent declaratory ruling from the Federal Communications Commission defining the term "called party" to include any "registered subscriber" or "customary user" of the phone line, and stated that "consent from either would shield [defendants] from liability." 

However, not all courts have been generous to defendants in interpreting whether a caller has the appropriate consent under the TCPA, and the Third Circuit's reassurances notwithstanding, the potential for inadvertent liability remains.

In Osorio v. State Farm Bank, F.S.B., for instance, defendant State Farm faced liability under the TCPA for attempting to recover an outstanding credit card balance by placing autodialed calls to a cell phone number that the debtor herself had provided.  

As it happened, the number that debtor supplied belonged not to the debtor but to her housemate, with whom she shared a residence, an adult son and a joint cell phone plan registered in the housemate's name. After receiving a number of calls from State Farm attempting to reach the debtor, the housemate filed suit seeking statutory damages under the TCPA.  

State Farm moved for summary judgment, arguing that as the intended recipient of the calls, the debtor was the "called party" under the statute and had provided her consent to be called at that number. 

The district court granted State Farm's motion, but the Eleventh Circuit reversed on appeal. Specifically, the appellate court rejected State Farm's argument that the term "called party" refers to the "intended recipient" of the call. Relying instead on common law principles of agency and consent, the court found that debtor had no authority to consent to autodialed calls to the plaintiff's cell phone and that, despite its good faith efforts to comply with the statute, State Farm still faced potential liability. 

It’s worth noting that the FCC's recent declaratory ruling, which the Third Circuit cites so reassuringly in Leyse, wouldn’t have changed this outcome, as the debtor in Osorio was neither the "registered subscriber" nor a "customary user" of the housemate's phone and State Farm would still have faced liability.

Collection agencies and other businesses that rely on automated calling processes face expanded risk in the wake of the Leyse decision.

The decision create fertile opportunity for plaintiffs' attorneys to push to expand the class of plaintiffs permitted to bring TCPA claims under the Third Circuit's subjective "zone of interests" analysis. What’s more, the rejection of the interpretation of the statutory term "called party" as the "intended recipient" of the call creates the very real possibility of inadvertent liability for businesses making good faith efforts to comply with TCPA rules.

Robert D. Towey is a partner in the Newark office of Sedgwick LLP. He can be reached at, or via the firm’s website –  

Joseph D. Fanning is an associate in the Newark office of Sedgwick LLP. He can be reached at, or via the firm’s website –

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