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“Ringless Voicemail” Vendor Wins Section 230 Defense Against FTC–US v. Stratics Networks

[This is one of those opinions that is a slog to blog because the court’s statutory analysis made my head hurt. If this opinion confuses you, welcome to the club. FWIW, “Slog to Blog” would make a good band name.]

Stratics Networks offers ringless voicemail and VOIP services. The court explains that, with ringless voicemails, “users can mass deliver prerecorded messages directly to recipients’ voicemail inboxes without causing their phones to ring or giving recipients the opportunity to answer or block the call.”

[Note 1: I HATE getting voicemails. I don’t believe I’m the only person who feels this way. My outgoing voicemail message tells people to hang up and send me an email. Unlike voicemail, my email inbox is spam-filtered (unless places like Texas have successfully banned spam filters), and emails are much quicker for me to sort than voicemails. So the idea of getting unwanted and unrequested voicemails is not appealing to me.]

[Note 2: when I worked at the law firm in the 1990s, the firm’s voicemail system allowed senders to send ringless voicemails, i.e., voicemails not preceded by a phone call. I’d be sitting in my office working, and the voicemail light would magically go on without the phone ringing. I’d have to stop what I was doing, pick up the phone, log into the voicemail system, listen to the message, and if it was substantive, take written notes on the voicemail’s content. Ugh, I hated that!]

What is a “Telephone Call”?

The first question the court must resolve is whether ringless voicemails qualify as “telephone calls” for purposes of the Telemarketing Sales Rule, which prohibits deceptive or abusive telemarketing practices. The court says they are:

An interpretation of “telephone call” that does not include ringless voicemail would defy the common meaning of “telephone call.” First, people often leave voicemails when they fail to speak live with their intended recipient. Ringless voicemail is akin to leaving a voicemail when a consumer’s phone is turned off and unable to ring or be answered. Second, most consumers access their voicemail inbox via telephone. Common meaning then suggests the FTC intended to regulate ringless voicemail under the TSR regardless of whether the underlying technology uses telephone wires.

[Note: the court says that most voicemail inboxes are accessed via telephone. OK boomer. I have all of my office voicemails forwarded to my email inbox, where I listen to them. This means I receive my voicemails instantly wherever I am. I don’t use an auto-transcription feature, but that also helps sort voicemails. So listening to voicemails via telephone is so old-school.]

The court is engaging in a standard analysis of technological definitions, which frequently age poorly as the technology evolves. In the old days, a “telephone call” had certain properties. The phone ring would sonically interrupt the recipient, disrupting their concentration or waking them up from sleep. The incoming call would tie up the telephone line so other incoming and outgoing calls weren’t possible. The “call” would be synchronous, i.e., the caller and recipient talked to each other in real-time. “Ringless voicemails” share none of these attributes. In fact, about the only thing ringless voicemails share in common with old-school telemarketing is that both involve the dissemination of audio over an electronic network. So I’m not on the same wavelength as the court about the “common meaning” of a telephone call.

We can test the court’s “common meaning” by noodling what digital voice communications are NOT “telephone calls.” Is a Facetime conversation a “telephone call”? What about a Zoom meeting? If I send an audio message by text message, is that a phone call? These questions brought to mind the old Joffe case, where the held that the TCPA applied to “text calls”–say what??? (See more possibly related blog posts on the incoherence of definitions of various electronic media). Or we can flip this around–would a ringless voicemail qualify as an “email” for CAN-SPAM purposes?

As I wrote in 2005 in the Joffe post:

Regulatory efforts to carve up marketing on a per-technology basis have failed. We can’t separate telephone from email from faxes technologically, so efforts to do so legislatively are bound to lead to weird results like an anti-telemarketing law restricting sending email to a person who will receive it as email.

It’s cool that courts are still wrestling with the same question 20 years later.

Stratics’ Eligibility for Section 23o

Stratics disseminated third-party voicemails using its ringless voicemail technology. This sounds like an easy Section 230 case, no? The court does get there, but in a way that will make your head hurt. The result is a rare FTC loss on Section 230 grounds.

ICS Provider. The court says Stratics qualifies as an “access software provider” because “Stratics provides software allowing users to transmit messages to consumers’ voicemails.” The FTC argued “that because multiple users cannot access the same content, Stratics is not an interactive computer service.” I guess the FTC is taking the position that 230 only applies to public posts, not private messages? That tired argument has failed numerous times before:

Twitter is still an interactive computer service for its direct messages, which are nonpublic, because multiple users can access the site. [Cite to Fields v. Twitter]. Similarly, Stratics does not need to make content publicly available to qualify as an interactive computer service. For example, Zoom still qualifies as an interactive computer service for private video calls because Section 230 only requires that Stratics “provides or enables computer access by multiple users to a computer server.”  [Cite to In re Zoom] Finally, the CDA does not require Stratics to distribute content over the internet. For example, Twitter is still an interactive computer service even if some messages are delivered via text messages because users can access the service via the internet. [Cite to Nunes v. Twitter].

To disqualify Stratics as an access software provider, the FTC argued that it was suing over Stratics’ offline conduct. “Plaintiff argues to grant Stratics immunity would be akin to granting a newspaper immunity for publishing defamatory advertisements in hardcopy form because those advertisements were submitted via an online webportal.” If offline distribution was in fact the correct analogy, then I would agree that Section 230 doesn’t apply, as I just blogged earlier this week. However, the court doesn’t see it the FTC’s way: “It ultimately does not matter that voicemail messages are delivered to consumers’ voicemails and are not accessed via a computer. Stratics would be forced to perform the content moderation responsibilities the CDA seeks to avoid if it were held liable.” The court might have strengthened this discussion by expressly saying that Section 230 applies to cyberspace, not only “the Internet,” and that includes electronic networks primarily moving audio.

Publisher/Speaker Claim. 

Plaintiff’s Complaint alleges Stratics provided substantial assistance to sellers or telemarketers in violation of the TSR for: (1) initiating outbound prerecorded telephone calls to induce the purchase of goods or services; (2) initiating outbound telephone calls to consumers on the National DNC registry to induce the purchase of goods or services; and (3) failing to disclose the identity of the seller of the goods or services truthfully, promptly, and clearly. Each of these claims derives from Stratics’s status as a publisher or speaker

The court discusses two Section 230 workarounds, neither of which apply.

First, the court says “Section 230 does not immunize providers against content-neutral claims.” The court is referring to HomeAway, but this decontextualized statement invokes the vexing Constitutional terminology about “content-neutral” regulations. (Also, as I repeatedly remind everyone, the phrase “content neutrality” is typically an oxymoron). I think the court is using the phrase to distinguish conduct-based claims from content-based claims? If so, it should have just said that and left the “neutrality” term out of it. In any case, the court says this workaround doesn’t apply:

With respect to content neutrality, each alleged violation is premised on the content of the messages delivered using Stratics’s ringless voicemail system. While Stratics’s conduct—namely its ringless voicemail delivery system—is the basis for its alleged substantial assistance, Stratics is only liable because of the content of the messages delivered. Claims 1 and 2 allege Stratics delivered calls to induce the purchase of goods or services. If Stratics’s customers were not hawking their wares, Stratics would not be liable for providing substantial assistance. Claim 3 alleges Stratics provided substantial assistance to Stratics customers who did not appropriately disclose their identities in attempting to induce the purchase of goods or services. If Stratics’s customers had disclosed their identities, Stratics would not be liable. Accordingly, these claims are not content-neutral….

To avoid liability for providing substantial assistance, Stratics must monitor and screen the content of users’ voicemail messages. The CDA was enacted specifically to avoid imposing these moderation duties on providers.

So messy. Section 230 says websites aren’t liable for third-party content. Stratics disseminated third-party content, and the FTC wants to hold Stratics liable for that content. This isn’t complicated; whereas any judicial inquiry into “content neutrality” is going to create drama–and errors.

Second, the court says that “Section 230 permits claims that do not derive from the defendant’s status as a publisher or speaker…For example, contractual duties, supervisory duties, and tort duties, including a failure to warn, may still be brought against providers because those claims arise outside the zone of free speech and publisher interests Congress sought to protect in enacting the CDA.” That’s a pretty gross oversimplification. If those claims are being wielded to hold defendants liable for third-party content, then Section 230 applies. I think the court is trying to say that the subject matter of the third-party content is a but-for cause of the FTC’s claim; but recall that but-for prerequisite is exactly what the lower court in Neville v. Snap expressly rejected.

In any case, the court responds:

Stratics allegedly provides substantial assistance to sellers and telemarketers by virtue of distributing their content. Distribution of content is quintessential publishing activity.

It really is that simple.

Third-Party Content. “Stratics’s users generate the prerecorded messages distributed using Stratics’s platform. While Stratics developed the ringless voicemail technology at issue, that development goes to how the third-party content is distributed rather than the content itself. Therefore, third parties generate the offensive content alleged in Plaintiff’s Complaint.”

Implications. I’m sure the FTC will appeal this ruling. The FTC hates Section 230, they never want to limit their range of defendants, and they may be concerned that the court’s holding could infect the FTC’s over-interpretation of the FTC Act. On appeal, it wouldn’t surprise me if the appellate court analyzes the case differently. I still think Section 230 should apply, but the Ninth Circuit should get away from any “content neutrality” articulation of Section 230 and provide a cleaner approach to the content/conduct divide. Pending appeals in other cases will also push the Ninth Circuit to clarify the conduct/content distinction, probably before this appeal is heard.

Case Citation: U.S. v. Stratics Networks, Inc., 2024 WL 966380 (S.D. Cal. March 6, 2024)

The post “Ringless Voicemail” Vendor Wins Section 230 Defense Against FTC–US v. Stratics Networks appeared first on Technology & Marketing Law Blog.

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