A District Court judge in California has granted a motion to dismiss filed by one defendant in a Telemarketing Sales Rule case but denied motions to dismiss from the other two defendants in a case that was brought by the Federal Trade Commission.
Background: The FTC filed suit against the defendants, alleging their telemarketing and debt validation scheme violated the Telemarketing Sales Rule and the FTC Act. One of the defendants — Atlas Marketing — was accused of using the ringless voicemail product of another defendant — Stratics Networks. When consumers returned the messages and called Atlas, they were connected to a telemarketer who sold the debt relief services. In many cases, the consumers were then transferred to the third defendant –Ace Business Solutions — which verified the consumers’ information and payment details.
The Ruling: Judge Cynthia Bashant of the District Court for the Southern District of California, granted the motion to dismiss filed by Stratics, ruling that it is an interactive computer service — much like Twitter — and the FTC’s issues are with the content of the messages, not the messages themselves.
- As for the motions to dismiss by the other two defendants, they were not as lucky. But it was not for a lack of trying. Atlas and Ace made a number of arguments that they case against them should be dismissed, but Judge Bashant rejected each and every of their claims.
- One of the most notable claims was that the defendants didn’t know that ringless voicemails constituted “telephone calls” under the Telemarketing Sales Rule. While that had never been officially determined, it has now.
- “By the plain meaning of the TSR, the structure of the TSR, the regulatory history of the TSR, and the enforcement history of the TSR, Plaintiff has alleged Atlas and similarly situated defendants could have been on notice that ringless voicemails were regulated by the TSR,” Judge Bashant wrote.