There’s an interesting little fight going on in a Telemarketing Sales Rule (“TSR”) case brought by the Federal Trade Commission and the Florida Attorney General in the U.S. District Court for the Northern District of Illinois that is flying a bit under the radar. Lifewatch Inc. is in the midst of battling the FTC’s motion for a preliminary injunction in FTC, et al. v. Lifewatch Inc., et al., No. 1:15-cv-05781 (N.D. Ill.), which, according to Lifewatch, is based on “unreliable” and “manipulated” consumer complaint data that the FTC received through its Consumer Sentinel complaint database.
More specifically, the Commission and state Attorney General have alleged that Lifewatch, the seller of medical alert systems, through its telemarketing partners, has violated the TSR, and the FTC is seeking to enjoin the company’s telemarketing campaigns. In support of the motion, the FTC submitted an expert summary of 17,000 complaints from the Sentinel database that supposedly link to Lifewatch’s telemarketing tactics. The complaints allegedly link Lifewatch’s telemarketing partners to violations of the TSR.
The dispute may be resolved on evidentiary grounds. The FTC argues that the complaints should be admissible because even hearsay may be admitted at the preliminary injunction stage where it has sufficient guarantees of trustworthiness. Lifewatch seeks to strike the Sentinel complaint data by challenging the reports as hearsay, and also challenging their trustworthiness. Indeed, Lifewatch has cried foul, characterizing the FTC’s particular use of consumer complaint data as “unreliable,” “manipulated,” and “engineered.” Lifewatch notes that out of all 17,000 complaints, only two actually reference Lifewatch and “[m]any of the complaints have no connection whatsoever to medical alert devices. And some of the complaints are specifically connected to Lifewatch’s competitors.” Additionally, only 28 complaints out of 17,000 are directly attributable to Lifewatch’s outside sellers. Lifewatch alleges that the FTC, then, expanded this small number of complaints in a “result-oriented” approach that lacked reliability.
Lifewatch argues that the FTC is using the Sentinel database inappropriately. Specifically the FTC “expand[ed] the complaints by searching telephone numbers associated with certain companies named in database complaints. At the same time, [the FTC] selectively disregarded other company names associated with the same telephone numbers found in the same data set. Indeed, [the FTC’s expert witness] conceded that he did not even look to see whether the complaints that came up in his expanded search identified the companies that the consumers identified in the calls or the types of products being marketed in the calls.” In short, Lifewatch claims that the FTC’s complaint data is seriously flawed and even “engineered” to produce a desired result while doing nothing to verify its accuracy.
If Lifewatch’s challenge successfully has Consumer Sentinel reports deemed unreliable, the FTC’s evidentiary burden will be far greater at the preliminary injunction stage and the Commission will need to do more than simply run a keyword search in its complaint database and attribute all hits to a particular defendant. We will be following this case as it develops, as well as other TSR and Telephone Consumer Protection Act (“TCPA”) cases throughout the country. You can find a recent list of these cases here.