Business

Cannabiz Eyes Supreme Court Texting Case

By Alex Halperin
Dec 9, 2020
United States Supreme Court Building, Washington DC, America

On Tuesday, the U.S. Supreme Court heard arguments in Facebook v. Duguid, a case with major implications for text-message marketers, including many cannabis companies. 

At issue are is who tele-marketers and SMS marketers can contact. The kinds of contacts that are permissible is difficult to interpret because the relevant law, the Telephone Consumer Protection Act (TCPA), dates to 1991, when current technologies were scarcely imagined. With many cannabis companies flush with cash, or perceived to be, and heavily reliant on text marketing, they have become targets for TCPA suits.

The Supreme Court case was brought by plaintiff Noah Duguid, who received unwanted log in texts from Facebook in 2014, even though he didn’t have a Facebook account. The company has suggested that someone who previously had his number had an account. 

After Duguid lost his initial case, he appealed to the federal Ninth Circuit Court of Appeals, which ruled against Facebook. It determined that the technology involved in sending the messages constituted a violation of the TCPA. 

While unwanted text messages might sound like a minor inconvenience, potential penalties of $500 – $1,500 for each violating text or call create a potential existential threat for transgressors. 

  • In 2019, an Oregon federal jury ruled against multilevel marketing company ViSalus Inc. for making 1.8M unsolicited robocalls. In September a federal judge upheld a $925M judgement against the company. 

 Several major cannabis players are dealing with TCPA cases. Among them: 

  • In October 2019, Eaze won a dismissal of a TCPA case on grounds that the plaintiff was bound to resolve the dispute in arbitration. A second federal case, Lloyd vs. Eaze Solutions Inc., has been stayed pending the resolution of Facebook vs. Duguid.
  • Along with Lyft and Postmates, Eaze filed an amicus brief in support of Facebook. Together, the companies argue that “unreasonable decisions” such as the ninth circuit’s ruling “interfere with services that consumers actually want and expect, and that could implicate basic business operations that neither pose harm to consumers nor violate policies underlying the TCPA.” Eaze declined to comment further.
  • On November 30, a federal judge in New York rejected MSO Curaleaf‘s motion to dismiss a TCPA case. The judge said an explanation is forthcoming. Curaleaf declined to comment. (WeedWeek previously wrote about the case.)  

If the Supreme Court upholds the Ninth Circuit’s decision, the “threat of litigation” would continue to exist for companies that send text messages to numbers stored on marketing lists created by the respective companies, Greenspoon Marder attorney Lawren Zann told WeedWeek.   

In arguments, Facebook appeared to receive a sympathetic hearing from liberals and conservatives on the bench, who are expected to render their verdict this Spring.