TCPA Survivor: Fundraiser for the American Cancer Society Evokes the Nonprofit Exemption to Escape Liability 

Nov 30, 2017 | Posted by Elizabeth Chiba Rein | Topic: Class Actions

The Northern District of Illinois recently granted summary judgment for Associated Community Services (“ACS”), a registered professional fundraiser soliciting funds for the American Cancer Society (the “Society”), who had been sued under the Telephone Consumer Protection Act (“TCPA”) in Spiegel v. Reynolds, No. 1:15-cv-08504, (N.D. Ill. Oct. 11, 2017).  This decision is particularly noteworthy, given that it is one of the few federal court opinions analyzing the TCPA’s nonprofit exemption. 

In Spiegel, Plaintiff alleged that ACS violated the TCPA by calling him when his name appeared on the do-not-call registry and by using prerecorded voices.  The issues before the Court were (1) whether the calls were made “on behalf” of a tax-exempt non-profit organization and (2) whether calls with requests for monetary donations constitute telephone solicitations under the TCPA.

As for the first issue, the Court examined whether there was an agency relationship between ASC and the Society because calls by or on behalf of tax-exempt nonprofit organizations are not considered telephone solicitation under the TCPA.  It was undisputed that ASC had a series of contracts that required ACS to solicit funds on behalf of the Society.  The Society controlled the flow of cash from the fundraising and exercised control over ACS’s activities by providing edits and approval of call scripts and written materials.  Based on this level of control, the Court found there was a genuine agency relationship between the Society and ACS whereby the Society acted as the principal by hiring ACS and supervising ACS’ efforts.  Thus, ACS’s actions were conducted on behalf of the Society and fell within the TCPA’s nonprofit exemption.

The Court also found that even if ACS had not been calling “on behalf of” a tax-exempt nonprofit, ACS would still be entitled to summary judgment on Plaintiff’s do-not-call claim because its calls were not telephone solicitations.  Telephone solicitation is defined as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services.”  47 C.F.R. § 64.1200(f)(14); 47 U.S.C. § 227(a)(4).  The Court reasoned that based on the clear language of the TCPA, the definition of solicitation does not include requests for monetary donations that do not encourage buying, renting, or investing in some sort of property, goods, or services.

While this case marks a huge win for nonprofits and their fundraisers, the plaintiff’s bar may nevertheless launch future challenges regarding the scope of the TCPA’s nonprofit exemption.