Off the Grid: TCPA Class Action Settlement for Energy Utility Company

This post originally appeared as a Sutherland Legal Alert, and is re-published here with permission.

Utility companies continue to face ongoing litigation under the Telephone Consumer Protection Act (TCPA) that can arise from the use of automated communications with customers for purposes of marketing, customer servicing and collections. Recently, a New York federal court granted preliminary approval of a $1.1 million class action settlement involving a gas and electric utility that was alleged to have made more than 450,000 automated telemarketing calls to cellular telephone numbers. Sutherland represented the utility company through protracted litigation and negotiated the class settlement. More generally, utility companies are continuing to face litigation and compliance challenges under the TCPA.

Abramson v. Alpha Gas & Electric

Alpha Gas is one of many energy utility companies that has faced litigation under the TCPA over the past several years. Similar to dozens of other cases, the plaintiff alleged that the company violated the TCPA by making telemarketing calls using an autodialer. The plaintiff alleged in the complaint that he heard a click upon answering his phone, after which the call was transferred to a live operator. The plaintiff, through an expert, alleged that the company made more than 450,000 autodialed calls to more than 250,000 unique cellular telephone numbers.

After more than a year of litigation, during which the company raised defenses based on standing and mootness, the case was settled for $1.1 million. The United States District Court for the Southern District of New York granted preliminary approval of the proposed settlement on November 10, 2016, with a final approval hearing set for early 2017. The settlement includes a common fund from which payments will be made to all class members who submit valid claims. 

The TCPA Continues to Impact the Energy/Utility Industry

The TCPA continues to raise litigation and compliance challenges across the energy industry, with dozens of new TCPA lawsuits being filed against the industry each year. The allegations in these cases frequently relate to the efforts of companies to communicate with customers and potential customers by telephone and text message. 

Recent litigation has challenged both marketing calls and non-marketing calls, such as servicing and collection calls. For example, in one case, a federal district court considered allegations that a company placed marketing calls regarding its solar power installation services. Waterbury v. A1 Solar Power Inc., No. 15CV2374, 2016 WL 3166910, at *4 (S.D. Cal. June 7, 2016). The court granted in part and denied in part a motion to dismiss, finding that one plaintiff had failed to adequately allege use of an autodialer to make the calls, whereas the other plaintiff sufficiently stated a claim that the call was made with an autodialer for marketing purposes. 

In another recent decision, a federal district court dismissed claims against a gas and electric utility arising out of more than 200 collection calls allegedly made to the plaintiff. The energy company was dismissed from the case on summary judgment, with the court holding that the calls had been made by a third party and not on behalf of the company. Klein v. Just Energy Grp., Inc., No. CV 14-1050, 2016 WL 3539137, at *4 (W.D. Pa. June 29, 2016). Both of these cases illustrate the types of litigation being filed against the industry under the TCPA.

An Order from the Federal Communications Commission (FCC) earlier this year is unlikely to halt the flow of new cases. On August 4, 2016, the FCC ruled in a declaratory order that utility companies may make robocalls and send automated texts to their customers concerning matters closely related to the utility service, without violating the TCPA, if the calls are made to the number provided by the customer. The FCC reasoned that such communications, including those relating to planned or unplanned service outages, do not violate the TCPA because utility customers are deemed to have provided consent to receive these calls and texts when they gave their phone numbers to the utility company. Although utilities benefit from having certainty in rules, the victory is a hollow one because the FCC still requires prior express consent for all automated calls and texts to cell phones. Utilities can gain some measure of comfort in the FCC’s ruling but must remain vigilant in maintaining proper records, if needed, to prove customer consent and must maintain current, up–to-date records of customer contact information, especially cell phone numbers.

As with virtually all consumer-facing industries, the TCPA challenges of the energy/utility industry are expected to continue as companies seek to protect themselves from a continuing wave of litigation.