Google and co-defendant Slide, Inc. will have to defend a class-action lawsuit in the Northern District of California after Judge Yvonne Gonzalez Rogers denied a motion to dismiss based on First Amendment grounds. The lawsuit was based on text messages sent by Google's Disco application, which allowed customers to simultaneously send the same text message to a network of as many as 99 other cell phones. When a person established a network, Disco would send a text message to everyone in the network informing them about the Disco service and offering them the chance to opt out of the network.
The class-action plaintiffs alleged Disco's introductory text was an advertisement, while Google claimed it was merely an informational message. Therefore, argued Google, the lawsuit could not succeed because to block truthful, non-commercial speech would work a violation of the First Amendment's freedom of speech guarantees. The advertisement/information distinction was crucial because the Telephone Consumer Protection Act makes it illegal to send unsolicited advertisements via text messages.
Judge Rogers sided with the plaintiffs, at least at this early stage, and refused to dismiss the lawsuit. Because Google had raised the free speech argument via a motion to dismiss, Judge Rogers was required to assume the plaintiffs' allegations were true. Therefore, she declined to determine at this time whether the Disco texts were ads or informational, because the plaintiffs alleged they were advertisements. It is possible Google could reargue this point on a summary judgment motion after discovery has taken place, but this adverse ruling could spur Google into settlement discussions. Coincidentally, Google is shutting down the Disco service today, March 6th, less than two years after acquiring Slide for about $180 million.
Take away: Although the Telephone Consumer Protection Act only applies to advertisements, if there is any gray area at all in a text message, robo-call or unsolicited fax as to whether the message is an advertisement or not, the safer course of action is to assume a court would consider it to be an advertisement and be sure you are in compliance with the TCPA and relevant state laws.
PartnerScott has focused on complex commercial litigation and arbitration involving advertising and marketing law, class action defense, administrative investigations, contractual disputes, consumer fraud, and business ...