Federal Agencies Should Stop, Not Facilitate, Litigation Abuse

As a small business owner, I often hear about abusive litigation threats but never thought they would affect me – until now. I own a small technology business based in Kansas City called TextCaster that provides text-messaging services for educational, civic, nonprofit and corporate organizations. Over the past 18 months, my company has been hit hard by plaintiffs’ lawyers who have mastered the art of the legal “shake down.” They demand money from our clients over their perfectly legal texting practices, and in return for a payoff promise not to file the threatened lawsuit.

The ammunition for these abusive litigation tactics is the Telephone Consumer Protection Act and the related regulations promulgated by the Federal Communications Commission, which are ostensibly intended to protect consumers from unsolicited texts. But TextCaster’s clients have no desire to text those who do not want to receive texts. They send only non-commercial alerts that people affirmatively sign up to receive. And unfortunately, instead of providing clarity about how people who have asked for texts can later opt out, the FCC’s actions of late have just created uncertainty.

Specifically, the FCC ruled that someone who previously asked to receive text messages can revoke that consent by “any reasonable means.” This standard may sound good – even reasonable – but it is highly vague in practice. Can it be “reasonable” to revoke prior consent in a way that never actually reaches the sender? One would think not, but extortionist plaintiffs’ lawyers make their money in this twilight zone of uncertainty.

They are threatening my clients with class action lawsuits for sending texts, claiming that some people revoked their consent even though the revocation never made it to my clients. They then price settlement offers to make it cheaper and less risky to settle than go to court. Not a single one of these threatened lawsuits has ever actually been filed, because it turns out that the plaintiffs’ lawyers don’t want to go to court either. Filing lawsuits costs them money, requires them to prove their claims and could end up providing the clarity that will close their beloved legal loophole.

Unfortunately, some companies are paying these ransom settlements because they cannot afford either the costs or risks of complex litigation. And some have abandoned their legitimate and useful text-messaging programs just to avoid the legal uncertainty, despite the fact that both they and their users want to be able to communicate via text. As a result, my company has lost tens of thousands of dollars in revenue and incurred significant legal fees just to be able to manage this threat.

My clients are hardly alone. I am told that plaintiffs’ lawyers have threatened other businesses with comparable claims, no doubt costing them time and money too. We’ve certainly all heard of other small businesses, including mom-and-pop restaurants and retailers, being hit with litigation threats over alleged violations of the Americans with Disabilities Act, as well as alleged patent infringements. For a single small business, it can make sense to make such a case go away by settling, but it makes no sense for our legal system to facilitate pay-outs to lawyers who send unwarranted demand letters.

My company is seeking needed clarity from two sources. The first is the U.S. Court of Appeals for the D.C. Circuit, where the FCC’s texting regulations have been on appeal since shortly after the agency’s most recent interpretation of those regulations was announced. That appeal remains pending even though it has been more than a year since it was filed and six months since it was argued. Second, through TextCaster’s parent corporation, we have petitioned the FCC for a ruling that revocation of consent provided in ways that never reach the texting party cannot be deemed “reasonable.” This petition has now also been languishing for more than a year. Litigation under the TCPA should focus on those who continue to send texts after actually receiving revocation of consent.

The FCC, like all regulatory agencies, should give thorough consideration to the effect its rulings have both on beneficial economic activity and on lawyers whose sole aim is to extract money by gaming the litigation system. This pragmatic approach to regulation should find broad bipartisan support. As we have learned all too well, creating a cloud of legal uncertainty provides an irresistible opening for plaintiffs’ lawyers. I encourage the FCC to decide each and every petition pending. Each petition represents a party in limbo, frequently a small business like mine, that is losing money and opportunities with each passing day.


Rob Sweeney is the founder and CEO of Mobile Media Technologies LLC, which is based in Kansas City, Mo.

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