Why Everyone Should Root for Twilio to Win Its TCPA Lawsuit

How the outcome of Twilio’s TCPA case affects us all

Twilio is the target of a TCPA complaint that could redefine the industry’s compliance landscape. TCPA complaints are routine for any large communications platform; however, this complaint is unlike most. The plaintiff alleges that Twilio is the originator of all texts and calls from its platform. He holds Twilio responsible for maintaining and verifying consent and alleges that in failing to do so, Twilio is willfully violating the TCPA. Should he win, it will turn the industry inside out. Long-standing legal interpretations would change, as would the FCC’s compliance obligations and the operating model of every messaging platform in the US. It could potentially change the model of mobile network operators as well. Regardless of what you think of Twilio, on this one issue, everyone should be rooting for it to win.

The Central Allegation

According to the complaint (emphasis plaintiff’s):

Twilio makes, initiates, and/or causes to be initiated the calls and text messages transmitted to Plaintiff within the meaning of the TCPA because: (1) Twilio software and servers, not the user, automatically determines what number a text message will come from; (2) Twilio software and servers, not the user, automatically generates the list of numbers that a message will be sent to; (3) Twilio’s software, not the user, automatically dials those numbers and/or sends a text message to those numbers; (4) Twilio’s software and server, not the user, assembles and constructs the text message itself;

It goes on to absolve the users of the system from any blame (emphasis mine):

By way of example only, in 2022, Plaintiff received pre-recorded calls and text messages from a company called Fulcrum Home Solutions, LLC (“FHS”) that did not obtain his consent. Plaintiff contacted FHS and they expressly identified Twilio as the service being used to generate pre-recorded calls in violation of the TCPA.

The plaintiff acknowledges that in this case, FHS did not obtain his consent. Most plaintiffs would stop here and either make FHS the defendant or attempt to show a high degree of involvement/partnership between FHS and Twilio. They would argue both parties were hand-in-glove when it came to the intent, content, and consent of the message and decision to send it. The plaintiff makes no such effort. Instead, the plaintiff seeks to hold Twilio solely responsible for FHS’s messaging activities.

The plaintiff’s aggressiveness is impressive. While the size of the settlement determines the success of the litigation, the goal is usually to work slowly and then expand the class through discovery. By holding Twilio responsible for all violations regardless of use case or client, the plaintiff is letting his intentions be known upfront. In fact, the complaint states (emphasis plaintiff’s):

Defendant Twilio is one example of a computer-based robo-calling service and automated text messaging service because it initiates or causes to be initiated millions of text messages and/or calls to cell phone users per month via computer program.

The plaintiff alleges that Twilio was willfully negligent. At $1,500 per willful violation, the statutory damages can add up quickly. Even a modest 10,000 calls could result in $15 million in statutory damages. Under the plaintiff’s theory, the platform owner—CPaaS, mobile network provider, or other telcos—would be responsible for obtaining and verifying consent for all calls that traverse its network. The potential damages are astronomical.

How Likely Is the Worst-Case Scenario?

On the one hand, the FCC’s rules and a long list of cases (including some won by EZ Texting) should make this case an easy win for Twilio. On the other hand, litigation is risky business. If the plaintiff wins—or even if Twilio settles early—this case could launch hundreds of copycat cases.

The TCPA’s superpower comes from two sources: its class-action status and the resulting statutory fines “per call.” If plaintiffs can prove there are others affected, they can fight on behalf of everyone, whether those individuals want to participate or not. The larger the plaintiff pool, the bigger the fine. If Twilio (or any other provider) is liable for consent associated with any of its subscribers’ calls, then it is liable for all of the calls. CPaaS and other providers treat their subscribers the same way. It is not hard to see the industry-wide impact this case could have.

The plaintiff aims to achieve class certification and expand the class size as much as possible. The defendant, on the other hand, seeks to quash the case before it reaches class certification or, if that fails, to minimize the class size. No one, including the court, wants to go to a jury trial. If the class includes 100,000 members, that means 100,000 jury trials happening in parallel. Needless to say, everyone prefers to settle, and the vast majority of cases do.

How the case gets settled matters. If there is any hint of wider exposure for Twilio, every class-action-factory law firm in the country will take notice and look to capitalize on it. Think late-night infomercials from law firms, but the TCPA edition. I, in fact, have had a run-in with the law firm representing the plaintiff.

The Personal Perspective on TCPA

From 2012 through 2019, I led EZ Texting’s regulatory and legal strategy. It was a tough, challenging time for the company. We were pushing traditions, and tradition was pushing back. One way this manifested was through TCPA lawsuits. It felt like there was a new case every year, with law firms alleging we were in violation. Losing any one of them would have irrevocably changed our business. Fortunately, we had capable counsel in Mike Hazzard, who understood the stakes.

I remember the first conference call with Mike. Unlike other lawyers at that time, he didn’t dive into fear-based selling. Instead, he let us know exactly what was at stake—the high-risk fight we had on our hands. Then he got angry. He was more upset about innovators like us getting dragged into the mud. I remember thinking he was madder than we were!

Mike and I got along well, and over the next five years we fought every TCPA case, winning each one and often setting legal precedent for others to win their cases. One of the cases we won was Adzhikosyan v. CallFire, represented by the same firm that now represents the plaintiff in the case against Twilio. Our first TCPA settlement wouldn’t come until much later, after enough legal wins had fortified our moat. In most cases, the settlements cost us $0.

Those five years were tough. When you’re spending hundreds of thousands of dollars fighting cases in court, everyone’s asking questions: your team, your board, your investors, and your customers. As a founder, you also face the additional question of whether you are the right person for the job. You’re asking that question yourself.

Professional management would recommend settling; they would “book the expense” in the current quarter and move on to growing the business. Few realize that sometimes settling can irrevocably change the business model, destroy the business, and cost jobs. While EZ Texting was the first innovator fighting this battle, we weren’t the only ones. If we were to lose any of these cases, it would change the lives of our competitors as well. This was, of course, lost on some of them.

Without exception, one of the complaints would “magically” find itself in the inbox of an FCC legal advisor, an industry trade organization executive, or a customer. The implicit suggestion was that associating with us would only cause them peril or reputational harm. I get that competition is industrial warfare, but the myopic gamesmanship did get annoying.

If this ever happens to you, don’t get defensive or attack the other player. Instead, talk simply and declaratively about why they’d find no better partner in you. If you have a culture of compliance, as EZ Texting does to this day, this should be easy. The best spin is always no spin.

Finally

Like Google now, Microsoft before it, and IBM before that, Twilio is the 800 lb. gorilla that everyone loves to hate. If you have beef with Twilio, this lawsuit provides plenty of fodder. However, if you know anything about the TCPA and the serial plaintiff industry it breeds, you’ll want Twilio to win this one. Losing it will not only be game-changing for them but for everyone else in the industry. One can only hope they’re getting the best representation they can afford and are as aggressive as they must be.

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Thank you for reading, and have a great week!

TJ