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That’s No Autodialer: D.C. Circuit Unwinds 2015 FCC TCPA Ruling

For our overview of the full D.C. Circuit opinion in ACA International v. FCC, click here. This article addresses the Court’s reversal of over a decade of confusion regarding autodialers. 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). While this definition may appear at first blush to be fairly straightforward, much litigation has been devoted to defining its contours. That litigation, as well as the D.C. Circuit’s recent decision have focused on two questions imbedded in the statutory definition: (1) what does it mean to have the “capacity” to perform the functions of an autodialer; and (2) exactly what functions make a device an autodialer?

What is “capacity” to perform like an autodialer?

The first inquiry focuses on “capacity.” A now historical paradigm questioned whether equipment had “present” or “potential” capacity to autodial, with callers stressing the need for present capacity. However, the Court dismissed that prior debate, finding that “whether equipment has the ‘capacity’ to perform the functions of an ATDS ultimately turns less on labels such as ‘present’ and ‘potential’ and more on consideration 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?”

The Commission’s 2015 approach to autodialer contemplated equipment that would require nothing more than the addition of software before functioning as autodialer (a more wordy version of plain ‘potential’ capacity). The Court was quick to point out that such a definition would bring into the ambit of an “autodialer” everyday smartphones:
“If a device’s ‘capacity’ includes functions that could be added through app downloads and software additions, and if smartphone apps can introduce ATDS functionality into the device, it follows that all smartphones, under the Commission’s approach, meet the statutory definition of an autodialer. The Commission’s ruling does not deny that conclusion.”

This finding clearly bothered the Court (as it has many defendants and observers): “If every smartphone qualifies as an ATDS, the statute’s restriction on autodialer calls assume an eye-popping sweep.” Indeed, the Court stated that “[t]he TCPA cannot reasonably be read to render every smartphone an ATDS subject to the Act’s restrictions, such that every smartphone use violates federal law whenever she makes a call or sends a text message without advance consent.”

Simply stated, “[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. It 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.” On this point the

Court found helpful Sutton v. United Airlines, Inc., in which the Supreme Court struck down a definition of “disability” which would have encompassed 160 million persons as disabled despite congressional findings that only 43 million such persons existed. Here, Congress noted that “[m]ore than 300,000 solicitors call more than 18,000,000 Americans every day.” Yet, under the Commission’s 2015 ruling, all calls and texts made by all smartphones qualify as would-be violations of the TCPA. “The Commission’s interpretation would extend a law originally aimed to deal with hundreds of thousands of telemarketers into one constraining hundreds of millions of everyday callers.” As such the Court set aside the 2015 Ruling’s interpretation of the “capacity.”

What are the functions of an autodialer?

At the outset, the Commission challenged whether the Court could retroactively address 2003 and 2008 orders regarding dialer functionality because those decisions were not timely appealed. The Court disagreed. When the Petitioners in ACA originally requested the FCC to address its definition of autodialers they not only asked for clarification of all prior rulings but also new rulemaking. Under applicable federal law and precedent, that request coupled with the FCC’s decision to clarify and denial to engage in rulemaking, provided the D.C. Circuit with authority to review prior rulings. Key here, is that the D.C. Circuit addressed the whole of the Commission’s writings on the definition of autodialer functionality, not simply the 2015 ruling.

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 found that the FCC itself in both previous rulings and the 2015 ruling “saw a difference between calling from a list of numbers, on one hand, and ‘creating and dialing’ a random or arbitrary list of numbers, on the other hand.” The Court then put it bluntly. “So which is it: does a device qualify as an ATDS only if it can generate random or sequential numbers to be dialer, or can it so qualify even if it lacks that capacity? The 2015 ruling, while speaking to the question in several ways, gives no clear answer (and in fact seems to give both answers).” Indeed, despite recognizing that it was a difference with a distinction, none of the Commission’s rulings over almost 15 years chose sides on the issue.

The Commission, however, was not without argument. First, it did posit a limiting principle that “’there must be more than a theoretical potential that the equipment could be modified to satisfy the autodialer definition.’” It also noted that “the ‘basic function’ of an autodialer is to dial numbers without human intervention . . . .” Lastly, “[t]he Commission further said that another ‘basic function[]’ of an ATDS is to ‘dial thousands of numbers in a short period of time.” However, none of these saved the 2015 ruling, and the Court ultimately found no salvageable rule. “In short, the Commission’s ruling in describing the functions a device must perform to qualify as an autodialer, fails to satisfy the requirement of reasoned decision making. The order’s lack of clarity about which functions qualify a device as an autodialer compounds the unreasonableness of the Commission’s expansive understanding of when a device has the capacity to perform the necessary functions. We must therefore set aside the Commission’s treatment of those matters.”

Where are we now?

So, what is an autodialer? The D.C. Circuit has wiped clean the FCC’s attempts at clarifying (and arguably extending) the boundaries of what qualifies as an autodialer. The Court has made clear that “present” and “current” capacity hold no meaningful weight. In answering the question of what is an autodialer, litigants must go back to the statutory language and the case law interpreting that text. This brings no great deal of clarity as it was in the face of a murky battleground that the FCC first weighed in—a battleground that did not improve, prompting two more proclamations by the agency, none of which passed muster for the Court. What is certain is that litigants can forget everything they knew about autodialers as explained in the 2015 ruling. 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.” Armed with the D.C. Circuit’s opinion, callers will no doubt make the next battleground about rediscovering this statutory definition and the case law interpreting it, as a holding that no autodialer exists is a headshot to any TCPA lawsuit.