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Does Insurance Cover TCPA Text Messaging Lawsuits?

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Video Transcription

Derek: Hi, Derek Johnson with We’re here at Innovista Law, home of the TCPA Defense Force. I’m sitting here with David Carter, a TCPA attorney. And we’re discussing today about brands and if their insurance policies cover, I guess, TCPA litigation or threats, the whole, I guess, TCPA landscape?

David: Sure. So it’s a pretty interesting issue. I dug into this recently to understand what’s happening within the insurance environment with regards to TCPA litigation. And what I found out there is…I think you said is, does it typically? And it’s a really difficult question to…

Derek: I know it’s a loaded question.

David: …to answer. What we’ve seen over the last many years is as we’ve seen this rise in TCPA litigation and the increase in number of cases, we’ve also seen more and more insurance carriers create a explicit carve-out in their policies saying, “We do not cover…”

Derek: Oh, interesting.

David: “…TCPA cases.”

Derek: Because it went up. Like, I have the numbers here. In 2007, we had 14 TCPA cases in the entire country. 2016, last year, we had nearly 5,000.

David: Correct. So…

Derek: Okay, so this is, like, a huge issue.

David: It’s become a huge issue in terms of the amount of litigation. Insurance companies are paying attention to that. And so, in this time period, you’ve had a series of cases that have tried to seek coverage for insurance coverage under TCPA. And they’ve tried to get that through like advertising damages and say, “Well, you know I was sending text messages or making phone calls as part of my advertising. So that should cover my TCPA exposure.” Then you’ve had people that have tried to get coverage actually under their D&O, Directors and Officers, policies. So there’s been a series of cases around whether those policies might cover it. And then you also had, in addition to the advertising injury, you had people say, “Well this is also kind of a privacy issue. And so…”

Derek: Oh, interesting.

David: “…maybe my policy covers if I’m charged with invading privacy or property, right? So someone’s phone is their property. So maybe I can get coverage in those ways.” So you’ve had cases really take a look at this issue and try to get coverage under a number of different prongs. And each time that happens, each time someone explores a new avenue…

Derek: The insurance company comes in.

David: Then the insurance companies come in, and they try to make an explicit statement that says, you know, “Violations of the Telephone Consumer Protection Act are not covered by this particular part of our policy.” So,when companies are looking at their policies…

Derek: Yep, their insurance policies that they have in place.

David: …their insurance policies, they should first look for those explicit carve-outs, right? And they should examine the policy to determine, you know, “Is this policy very clear that I’m not gonna get coverage under the TCPA?”

Derek: Or Telephone Consumer Protection Act, they might…

David: Right. They’ll probably see “Telephone Consumer Protection Act” in there. So they should look for those explicit carve-outs. If they find them, that helps to answer, you know, a question of whether that policy is gonna provide protection, though it’s still, if they do get in litigation, it’s probably worth having a lawyer review or double-check that.

Derek: Review. Okay.

David: If they don’t see it, then they may have some arguments. At that point in time, it’s gonna depend very specifically on the state in which they’re in, how those courts have interpreted the policies in the state law to determine if they extend to the Telephone Consumer Protection Act. So it is very unlikely that they’re gonna have a clear answer on those questions. The area of litigation coverage for the Telephone Consumer Protection Act continues to evolve. They’re going to need to have an analysis done about whether or not, in their particular state and their circumstances, their policy might cover them. And so as a result of that gray area that continues to exist, we encourage companies to have a proactive approach, to talk with their insurer to try and determine if they can purchase a rider.

Derek: Okay. If they’re doing text messages.

David: If they’re doing…

Derek: Or phone calls, or faxes. Anything.

David: Sure. Anything that may be covered by the Telephone Consumer Protection Act. So it could be a call center, it could be text messages. It still could be faxes, even today.

Derek: Okay. Pagers, right? Yeah.

David: Yes. So they should then, you know, try to be proactive, in trying to take a look at that issue and understand, “Is it possible to get coverage? Maybe I can get a rider that is more explicit than actually giving me coverage?” And not wait until a problem arises to think about it.

Derek: So when the lawsuit lands, you call the insurance company, “Hey, are we covered?” Better to go right now if you’re doing anything that involves the TCPA. Phone calls, text messages, fax, pager. Go talk to your insurance company. It’s not gonna hurt you. It’ll just give you more info.

David: It’ll give you more info to make, then, informed decisions about, sort of, how to mitigate risk and things like that down the road.

Derek: Yeah. Now what are they gonna cover if, let’s say, you know, it is covered. I know there’s damages, I know there’s court costs, lawyer fees. Like, how much are we talking? Like, do you even need insurance to cover this? Is this small amounts?

David: So if you end up in litigation, and particularly if it is brought as a class action litigation, I mean, we have seen settlements of TCPA cases exceeding $75,000,000. We’ve seen claims far and excess of that, right, that people have had to defend. And depending, again, whether it’s a class action case, how serious the claims are. If they’re, you know…do they have a situation in which someone made an error, made a mistake, or are they just trying to create a new area of wall to bring claims in? So all of these things will weigh into how complicated it is to defend the case. Therefore, how expensive it is. And it’s not uncommon in Telephone Consumer Protection Act cases. For the cases, they usually get filed under state or federal court. And often times there will be issues that arise, and the judge in the case may say, “That’s an interesting, novel question. I’m gonna ask the FCC to weigh in on this.” So it might get referred over to the Federal Communications Commission to examine a particular legal issue before it comes back to the court. So, not in every circumstances. But we’ve certainly seen cases that do drag on for a while because they go from court to the FCC and back. And when you have those circumstances, you know, these cases can run for a period of time and become relatively expensive.

Derek: Extremely expensive, it seems like.

David: Yeah, so…

Derek: Okay, so, definitely review…if you are doing something that will kind of touch on the Telephone Consumer Protection Act, discuss with your insurance, you know, provider, review your insurance policy, and really know before there’s an issue.

David: Sure. And that’s why, when we counsel clients and we look at both what’s happening in the FCC…what’s happening at courts across the country, because every court’s not gonna get to the same answer on some questions. So we try to look at the whole country and understand the trends and what’s happening in different cases. And then we help our clients to take a conservative approach that hopefully keeps them out of the litigation in the first place.

Derek: That’s what I was gonna say. First thing is, make sure you don’t get there by following the rules, you know, and the rules are hard to understand. There’s a lot of new nuance in, so…

David: But it’s doable.

Derek: It’s doable, yeah, yeah.

David: That’s the other thing, right? It’s, like, we don’t want people to take the message away that, like, it’s hopeless and you shouldn’t do it.

Derek: No text messaging, no calls.

David: Yes. Because it’s definitely doable. There’s a lot of great brands that are doing this every day. They’re doing it well. They’re doing it effectively. It’s having great impact for them. But it’s a matter of, like, this is an area that you should be thoughtful about, that you should plan ahead on, and that you should really make sure you have a comprehensive approach.

Derek: Okay. Perfect. My name is Derek Johnson with I am here at Innovista Law, the home of the TCPA Defense Force. I’m sitting with David Carter, a TCPA attorney. And we just discussed essentially reviewing your insurance policy, discussing TCPA with your insurance carrier, as it can definitely have an impact down the road if you do run into an issue.

Derek: Thanks for watching our video today. If you like this video, be sure to give us a thumbs-up on YouTube. If you wanna see more of these types of videos, be sure you subscribe to our YouTube channel. And if you have comments or questions, please leave a comment or question in the comments section below.