Travel Company Must Face Suit Over Online Lead Generator's Robocalls

Siding against travel company Royal Seas Cruises, a federal appellate court has revived a lawsuit over pre-recorded robocalls placed by the lead generator Prospects DM, which said it obtained potential customers' phone numbers from outside websites.

In an opinion issued Tuesday, a three-judge panel of the 9th Circuit Court of Appeals essentially ruled that Royal Seas might be liable for Prospects' activity, because Royal Seas failed to adequately investigate whether Prospects was violating the Telephone Consumer Protection Act.

The ruling reversed an earlier decision by U.S. District Court Judge Cynthia Bashant, who threw out the claims against Royal Seas.

The decision grew out of a 2017 class-action complaint by San Diego resident John McCurley, who alleged that Royal Seas violated the Telephone Consumer Protection Act. That law prohibits companies from using autodialers to send ads, without recipients' consent.

Royal Seas countered that it tapped the Canadian lead generator Prospects DM to find potential customers, and that Prospects was contractually obligated to obtain the potential customers consent to receive phone calls.

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Prospects said it gathered phone numbers from outside websites, including www.diabeteshealth.info. The lead generator specifically said it obtained McCurley's number from that site, according to court papers.

The site tells visitors they may qualify for free or low-cost diabetic supplies, and asks visitors for their names, email addresses and phone numbers. Fine print on the page says people who submit their information agree to receive phone calls and text messages from dozens of companies, including Royal Seas Cruises.

McCurley said he never visited www.diabeteshealth.info or consented to receive calls by either Prospects or Royal Seas. McCurley's phone number also wasn't associated with his name in Prospects' records, but with the name “Jose Fernandez,” according to court papers.

His lawyers argued that it was implausible that the site -- and others supposedly relied on by Prospects -- could have generated enough traffic to account for the large volume of calls placed by the company. An expert for the plaintiffs noted that the sites named by Prospects weren't optimized for search engines, had no social media presence and didn't appear in the first 10 pages of Google search results.

In January of 2021, Bashant ruled that Royal Seas wasn't responsible for alleged robocall violations by Prospects.

But the 9th Circuit said there was a disputed factual issue over whether Royal Seas had “ratified” Prospects' phone calls -- essentially by turning a blind eye toward alleged violations of the robocalling law.

“Royal Seas had knowledge of facts that would have led it to investigate Prospects’s lead-generation activities to determine if it was calling only consenting individuals, but instead accepted leads generated by Prospects’s calls with scant investigation,” the appellate judges wrote.

They added that there was evidence that Royal Seas knew of “mismatched data,” such as between McCurley's phone number and the name Jose Fernandez.

The judges wrote that the questions surrounding the leads, combined with evidence of widespread violations of the Telephone Consumer Protection Act in the cruise industry, “would support a finding that Royal Seas knew facts that should have led it to investigate.”

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