Business

Another Class Action Telemarketing Case Hits Cannabiz

By Hilary Corrigan Aug 10, 2020
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Hydroponics Inc. seeks to pause a lawsuit it faces over its telephone marketing, citing the possible impact of a separate U.S. Supreme Court case involving Facebook.

Riverside resident Vanessa Camacho sued Newport Beach-based Hydroponics Inc.—Route Four LLC—in May. The class action suit alleges the cannabis agricultural services provider violated the Telephone Consumer Protection Act by contacting her on her cell phone and invading her privacy. (Read the complaint.)

The case raises telemarketing issues for businesses, including the cannabis industry, and what’s prohibited under law. The complaint focuses on text messages that may have been automatically generated to a cell phone whose owner had not granted permission for such notices.

Cannabis companies have faced class actions over telephone-related consumer protections before. Those include a text telemarketing complaint against Colorado cannabis company P2C3 LLC and one against Hobby Farms LLC—which does business as A Cut Above—in 2018. A case against California delivery service Eaze over unsolicited texts on cannabis sales was dismissed last year, with orders for the plaintiff to use an arbitration process.

Hydroponics’ Aug. 4 motion for a stay in the case at U.S. District Court in California’s Central District argues that the separate Facebook case decision “will provide much needed clarity on the definition of an ‘Automatic Telephone Dialing System,’ as defined by the Telephone Consumer Protection Act.” That’s the system the Plaintiff alleges Hydroponics used to send unsolicited text messages. (Read the motion.)

“Further litigation absent this guidance threatens to waste the Court’s and the parties’ resources,” the company’s motion states.

The complaint argues Hydroponics used automated telemarketing text messages to market and advertise its business and services through at least three messages to Camacho in 2019. The complaint includes an image of text messages, with one touting “end of summer sale” promotions, purportedly from the defendant. 

Camacho’s complaint says she never gave that cell number to the defendant or used its business. It argues that Hydroponics used a prohibited automatic telephone dialing system (ATDS) that has the capability to store or produce numbers, using a random or sequential number generator, and dial them without human intervention. The case is in its early stages and Hydroponics has not yet addressed the substantive issues.

Invading privacy?

The complaint notes the TCPA aims “to protect consumer privacy by, among other things, prohibiting the making of autodialed or prerecorded-voice calls to cell phone numbers.”

“The TCPA was designed to prevent calls like the ones described within this complaint, and to protect the privacy of citizens like Plaintiff,” the complaint states. It notes that “voluminous consumer complaints” about phone technology abuses like computerized calls to private homes prompted Congress to pass the act.

The messages invaded the plaintiff’s privacy, used that cell phone’s data, storage and battery life, and took time from the plaintiff’s life to investigate them, the suit says. 

The complaint argues that with a TCPA action, a plaintiff only needs to show a defendant called a number assigned to a cell phone service using an automatic dialing system or pre-recorded voice. It alleges Hydroponics promotes and markets its services by calling wireless phone users, in violation of the TPCA.

It seeks a jury trial and calls for $500 in statutory damages for each violation, plus $1,500 per violation because Hydroponics knew or should have known that the plaintiffs had not given consent to receive autodialed calls. 

The complaint says it does not know the exact number of class members but estimates at least 40. The suit expects a more precise number based on the defendant’s records, including its calls and marketing records. It calls Camacho an adequate representative of the class, who can protect their interests. 

‘Case will provide clarity’

Hydroponics’ Aug. 4 motion argues that the TCPA does not expressly regulate the sending of text messages, but that the Ninth Circuit has broadly interpreted the statute and the phrase “automatic telephone dialing system”—creating a split with other federal courts. The Supreme Court granted review of the Facebook case, the motion says, with briefing set for the fall. The review will address whether the definition of “automatic telephone dialing system” in the TCPA encompasses any device that can store and automatically dial telephone numbers, the motion notes.

“The outcome of this case may well depend on the meaning of an ATDS. If Route Four did not use an ATDS to transmit messages, it cannot be liable,” the motion states, calling for a stay on the case until the Supreme Court determines the issue in the Facebook case. “It is beyond question that the Supreme Court, in whichever way it rules, will provide clarity as to what constitutes an ATDS under the TCPA.”

The plaintiff objected Aug. 6 to the requested stay. That response argues that “binding Ninth Circuit precedent exists with respect to what constitutes an automatic telephone dialing system.”

“Defendant does not like this binding precedent and so it seeks a stay hoping that the Supreme Court will adopt a narrow ATDS definition that may allow it to escape liability for spamming consumers,” plaintiff’s response states. But “a stay in this case would amount to ignoring binding Ninth Circuit authority on a mere possibility that the law may at some point change to [Defendant’s] benefit.”

Regardless of how the Supreme Court rules in the Facebook case, the parties in this one still need to conduct discovery, according to the plaintiff’s response. That includes filing briefs on the issue of whether the equipment that the defendant used “to mass market through robocalls” is an ATDS. And lengthy stays make it harder to find class members and increase the risk that evidence will dissipate, the response says. But if the court grants a stay, the response called to limit it to the ATDS issue and allow discovery and briefing to proceed.

Attorneys for the parties could not be reached for comment.

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