D.C. Circuit Unwinds 2015 FCC TCPA Ruling: An Overview
- Filter By Consumer Finance Litigation
In a watershed case, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) unwound key components of the controversial 2015 ruling by the Federal Communications Commission (FCC or Commission) that greatly expanded the reach of the Telephone Consumer Protection Act (TCPA). The D.C. Circuit addressed four separate aspects to the 2015 ruling:
- the definition of autodialer;
- calls to reassigned numbers;
- revocation of consent; and
- an exemption for certain healthcare communications.
The 51-page decision upheld the 2015 ruling’s standard permitting consumers to revoke consent through any reasonable means so long as the revocation clearly expresses a desire to receive no further messages and also upheld the 2015 ruling’s exemption of certain time-sensitive healthcare calls. However, the D.C. Circuit struck down two significant portions of the 2015 ruling: (a) the re-definition of what is an autodialer; and (b) the one-call safe harbor for calls to reassigned phone numbers.
What’s an autodialer?
The TCPA defines an autodialer (automatic telephone dialing system, or ATDS) as “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. § 227 (a)(1). Untold numbers of cases and petitions to the Commission have attempted to demarcate the lines of that definition, but the Court believed two questions were dispositive: “(i) when does a device have the capacity to perform the functions of an autodialer enumerated by the statute?; and (ii) what precisely is the content of those functions?”
First, there must be some limitation on “capacity” given the ease with which common phones can be altered. According to the Court, whether a system has the “capacity” to function as an ATDS depends “on considerations such as how much is required to enable a device to function as an autodialer: does it require the simple flipping of a switch, or does it require essentially a top-to-bottom reconstruction of the equipment?” In finding that the Commission’s answer to that question was too broad, the Court pointed out that “[i]t is undisputed that essentially any smartphone, with the addition of software, can gain the statutorily enumerated features of an autodialer and thus function as an ATDS.” Yet, “[i]t is untenable to construe the term ‘capacity’ in the statutory definition of an ATDS in a manner that brings within the definition’s fold the most ubiquitous type of phone equipment known, used countless times each date for routine communications by the vast majority of people in the county.” Simply states, “[i]t cannot be the case that every uninvited communication from a smartphone infringes federal law, and that nearly every American is a TCPA-violator-in waiting, if not a violator-in-fact.”
Second, the “functions” of an ATDS must be clear. As with the question of capacity, the Court reduced its analysis to a singular inquiry regarding functionality: “A basic question raised by the statutory definition is whether a device must itself have the ability to generate random or sequential telephone numbers to be dialed. Or is it enough if the device can call from a database of telephone numbers generated elsewhere?” The Court concluded that even though the FCC itself “saw a difference” between those two circumstances, it failed to actually choose a side: “The 2015 ruling, while speaking to the question in several ways, gives no clear answer (and in fact seems to give both answers).” That, the Court held, “fails to satisfy the requirement of reasoned decision making and compounds the unreasonableness of the Commission’s expansive understanding of when a device has the capacity to perform the necessary functions.”
So, what is an autodialer? The D.C. Circuit has wiped clean the FCC’s expansive boundaries of what qualifies as an autodialer. Businesses must now go back to the statute and the case law interpreting that text. Remember, the TCPA defines autodialers (automatic telephone dialing systems) as “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (b) to dial such numbers.” Because any TCPA claim crumbles without an autodialer, the renewed fight over this definition will come quickly and fiercely.
What happens when I call reassigned numbers?
“The pertinent statutory language generally renders it unlawful ‘to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing equipment or prerecorded voice.’” The 2015 ruling found that ‘called party’ meant the current subscriber of the phone number and not the intended recipient of the call. The D.C. Circuit, looking to Seventh and Eleventh Circuit case law, agreed that the FCC’s interpretation was reasonable: “We find the Seventh Circuit’s analysis persuasive insofar as it supports concluding that the Commission was not compelled to interpret ‘called party’ in section 227(b)(1)(A) to mean the ‘intended recipient’ rather than the current subscriber. The Commission thus could permissibly interpret ‘called party’ in that provision to refer to the current subscriber.”
The Court disagreed that the Commission’s one-call safe harbor with respect to reassigned number was reasonable. In so doing, the Court noted that “[t]he Commission . . . consistently adopted a ‘reasonable reliance’ approach when interpreting the TCPA’s approval of calls based on ‘prior express consent,’ including as the justification for allowing a one-call safe harbor when a consenting party’s number is reassigned.” Yet, “[t]he Commission . . . gave no explanation of why reasonable-reliance considerations would support limiting the safe harbor to just one call or message. That is, why does a caller’s reasonable reliance on a previous subscriber’s consent necessarily cease to be reasonable once there has been a single, post-reassignment call? . . . In that light, no cognizable conception of ‘reasonable reliance’ support the Commission’s blanket, one-call-only allowance.”
The Court’s rejection of the FCC’s one-call safe harbor meant that the “called party” portion must also be set aside, even if, standing alone, it was reasonable. “When [the Court] invalidates a specific aspect of an agency’s action, [it] leaves related components of the agency’s action standing only if ‘we can say without any substantial doubt’ that the agency would have adopted the severed portion on its own.” In this case, though, the Court found it had no such assurance: “If we were to excise the Commission’s one-call safe harbor alone, that would leave in place the Commission’s interpretation that ‘called party’ refers to the new subscriber. And that in turn would mean that a caller is strictly liable for all calls made to the reassigned number, even if she has no knowledge of the reassignment.” The Commission itself found that result untenable, and the Court did as well.
As with the definition of autodialer, courts must turn back to the text of the TCPA itself. In that regard, a growing consensus finds that called party does not mean intended recipient, and that—as the Seventh Circuit held in Soppett v. Enhanced Recovery Co.—consent “lapses when [a] [c]ell [n]umber is reassigned.” That said, the Court in ACA, concluded with noting that “[t]he Commission recently sought comment on potential methods for ‘requir[ing] service providers to report information about number reassignments for the purposes of reducing unwanted robocalls.” Litigants should closely monitor the Commission’s actions regarding reassigned numbers.
What is a proper revocation?
“It is undisputed that consumers who have consented to receiving calls otherwise forbidden by the TCPA are entitled to revoke their consent. . . . The statute, however, does not elaborate on the processes by which consumer may validly do so.” In the 2015 ruling, the Commission adopted a totality of the circumstances approach, “conclude[ing] that ‘a called party may revoke consent at any time and through any reasonable means’—orally or in writing—‘that clearly expresses a desire not to receive further messages.” Ultimately, the Court determined that the Commission’s “any reasonable means” standard passed muster. However, in doing so, the Court provided weight to the growing case law pushing back against revocation claims.
First, the Court noted that “callers will have every incentive to avoid TCPA liability by making available clearly-defined and easy-to-use opt-out methods. If recipients are afforded such options, any effort to sidestep the available methods in favor of idiosyncratic or imaginative revocation requests might well be seen as unreasonable. The selection of an unconventional method of seeking revocation might also betray the absence of any ‘reasonable expectation’ by the consumer that she could ‘effectively communicate’ a revocation request in the chosen fashion.” The takeaway is that while callers cannot force consumers to revoke in predetermined ways, they can make available clear and easy means of revoking consent. If done properly, callers can guide—without requiring—plaintiffs to clearly to revoke in a given manner so that it’s simply unreasonable for a consumer to believe that other means of revocation could be effective.
Second, the Court noted that “[t]he Commission correctly concedes . . . that the ruling ‘did not address whether contracting parties can select a particular revocation procedure by mutual agreement.” And while “[t]he ruling precludes unilateral imposition of revocation rules by callers[,] it does not address revocation rules mutually adopted by contracting parties. Nothing in the Commission’s order thus should be understood to speak to parties’ ability to agree upon revocation procedures.” This means that terms and conditions in a signed writing may yet permit callers to dictate in what manner called parties revoke. This also means that the promise of Reyes v. Lincoln Auto. Fin. Servs. stays alive. Reyes found that contractual consent, once given, cannot be unilaterally revoked. Though few court decisions citing Reyes (for any proposition) exist, its reasoning is bolstered by the D.C. Circuit’s opinion, which (i) states that contractually dictating means of revocation is a live issue and (ii) specifically notes that the 2015 ruling has no bearing on the issue of contractual consent.
In short, it remains the law that consumers may revoke consent by any reasonable means. However, that rule speaks only to method of communication. Whether by contract or by simply offering multiple, easy avenues for opt-out, callers may still be able to set limits on what are reasonable means of revocation.
Where are we now?
The D.C. Circuit has largely reset the clock, placing the TCPA landscape back to early July 2015 before the Commission wildly expanded the scope of the statute. The return to the statutory text for the definition of autodialer heavily favors defendants and litigation fighting over the statutory language will likely be fierce. Though the case law outside of the 2015 ruling has pulled the definition of ‘called party’ away from ‘intended recipient,’ there is still reason to be hopeful that the reassigned number problem may yet be resolved by further Commission action. Lastly, parties must remember to always look for writings capturing consent, not simply for proving the all-important affirmative defense, but to rebut revocation. The aftershocks of the ACA decision may take years to fully feel, but litigants can rest assured that this is not the final word.