Tech Companies Back Yahoo In Battle Over SMS Messages

Twitter, Path and other tech companies are asking a federal appellate court to make it harder for consumers to win class-action lawsuits over unwanted SMS messages.

The tech companies say that the recent proliferation of lawsuits alleging violations of the Telephone Consumer Protection Act is forcing them to choose between avoiding text-based services or running the risk of litigation. They add that lawyers for consumers “have sought to transform a statute intended to target abusive telemarketing practices into an extortionist club used to coerce windfall settlements.”

Twitter, Path and the trade group Computer & Communications Industry Association make the argument in a recent friend-of-the-court brief backing Yahoo in its battle with Philadelphia resident Bill Dominguez.

He is suing Yahoo for allegedly sending him thousands of misdirected SMS messages. Dominguez argues that Yahoo violated the Telephone Consumer Protection Act, which prohibits companies from using automated dialers to send SMS messages to consumers. That law provides for damages of $500 to $1,500 for each text message that violates the statute.

U.S. District Court Judge Michael Baylson in Pennsylvania recently dismissed Dominguez's lawsuit, ruling that he hadn't shown that Yahoo used an automated dialer to send the messages.

Dominguez is now asking the 3rd Circuit Court Court of Appeals to reinstate the case. He filed the appellate papers under seal, so the details of his argument aren't yet known.

Yahoo is opposing that request. The company argues that its SMS system, which converted emails to text messages and sent them to users' phones, didn't rely on automated dialers.

Twitter, Path and the CCIA agree with Yahoo. They say that an automated dialing system should be defined as equipment that can automatically generate -- as opposed to merely dial -- phone numbers. “This interpretation avoids absurd results, helping to ensure that legitimate companies ... can continue offering innovative text message based services that consumers request and desire, without facing the risk of extortionist TCPA strike suits,” the companies argue.

They add that a broad definition of automated dialers “would have serious consequences. Under that approach, the TCPA would regulate nearly every call or text from a smartphone,” the companies say.

Twitter and the others add that Congress passed the law to prevent telemarketers from using automated systems to generate calls to “unlisted phone numbers, hospitals, or emergency organizations.”

Twitter and Path are among the numerous Web companies that have themselves been sued for violating the law regulating SMS messages. The companies say in their friend-of-the-court brief that around 1,200 new potential class-actions were filed last year alone.

“Companies in every sector of the economy -- footwear retailers, apparel manufacturers, fast-food restaurants, banks, sports franchises, electronic payment services, and online social networks -- have been swept up into a litigation maelstrom,” they write.

Many of those cases were filed after the influential 9th Circuit Court of Appeals ruled in 2009 that the Telephone Consumer Protection Act applies to SMS messages.

Since then, judges have reached different conclusions about the definition of automated dialers. Even though Baylson agreed with Yahoo, U.S. District Court Judge Gonzalo Curiel in the Southern District of California, who is presiding over a separate lawsuit, ruled that Yahoo's SMS-sending system was an automated dialer. In that case, California resident Rafael David Sherman alleged that Yahoo told him via SMS that he had received messages from the company.

Yahoo recently asked Curiel for permission to immediately appeal his ruling to the 9th Circuit. Curiel rejected that application in July.

Numerous other companies have settled similar lawsuits for millions of dollars. For example, Google recently agreed to pay $6 million to resolve allegations that an app operated by Slide (acquired by Google in 2010 and later shut down) used an automated dialing service to send SMS messages to people. That service allowed individuals to send group texts to up to 99 people at one time.

In the case against Yahoo, Dominguez alleged that he believed the former owner arranged to receive SMS alerts from Yahoo whenever he received emails. Dominguez -- who doesn't have a Yahoo email address -- alleged that he received almost 5,000 SMS messages from Yahoo in the five months preceding his lawsuit. He said he complained to Yahoo, but was informed that only the phone's former owner could arrange to stop the texts.

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