TCPA Watch

Business, legal and policy developments under the Telephone Consumer Protection Act.

 

1
U.S. Supreme Court To Rule On Hobbs Act Deference To FCC’s TCPA Rules
2
In Wake of ACA Int’l, Ninth Circuit Adopts Expansive Definition of ATDS
3
FCC Seeks Comment on TCPA Following D.C. Circuit’s Decision in ACA International
4
Congress Holds Hearings on Abusive Robocalls and Caller ID Spoofing – Possible Legislative or Regulatory Changes Requires Close Watch
5
Trade Groups Petition the FCC to Adopt a Narrow Interpretation of Autodialer Under the TCPA
6
District Court Finds No Violation of First Amendment in TCPA Suit Brought By Coalition of Bi-Partisan Political Organizations
7
Court Finds Website Owner Did Not Send Text Messages Initiated by its Users and thus Did Not Violate the TCPA
8
D.C. Circuit Strikes Key Elements of FCC’s 2015 Order Interpreting the TCPA, Upholds Certain Provisions
9
District Court Dismisses TCPA Class Action for Pharmacy Reminder Calls Under “Emergency Purposes” Exception
10
Legislative Efforts to Curb Caller ID Spoofing Continue at Federal and State Levels

U.S. Supreme Court To Rule On Hobbs Act Deference To FCC’s TCPA Rules

By Joseph C. Wylie II, Molly K. McGinley, and Lexi D. Bond

             On November 13, 2018 the U.S. Supreme Court granted certiorari in a Telephone Consumer Protection Act (“TCPA”) case in which the Fourth Circuit vacated the district court’s holding that an unsolicited fax sent by a health information provider offering a free e-book must have a commercial goal to be considered an advertisement under the TCPA.  This case presents important questions as to the scope of judicial deference to the Federal Communication Commission’s (“FCC”) rules under the Hobbs Act, which limits the ability of TCPA litigants to challenge FCC rules in private civil litigation.

In February of this year, the Fourth Circuit held that faxes that offer goods and services, even if the goods and services are free, are “advertisements” under the TCPA, and reversed the district court’s dismissal of the suit.  See Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, 883 F.3d 459, 469 (4th Cir. 2018).  In so ruling, the Fourth Circuit took issue with the district court treatment of a 2006 Rule promulgated by the Federal Communications Commission the FCC interpreting certain provisions of the TCPA.  Pursuant to its statutory authority to “prescribe regulations to implement the requirements” of the TCPA, see 47 U.S.C. § 227(b)(2), the FCC promulgated a rule providing that “facsimile messages that promote goods or services even at no cost . . . are unsolicited advertisements under the TCPA’s definition.”  See Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991; Junk Fax Prevention Act of 2005, 71 Fed. Reg. 25,967, 25,973 (May 3, 2006) (the “2006 Order”).  In the district court, plaintiff Carlton & Harris argued that the fax it received was an unsolicited advertisement as defined in the 2006 Order because it promoted a good at no cost.  Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, No. 3:15-14887, 2016 WL 5799301, at *4 (S.D. W. Va. Sept. 30, 2016).  The district court declined to defer to the 2006 Order, holding that the Hobbs Act did not compel the court to defer to “the FCC’s interpretation of an unambiguous statute.”  Id.  The district court further held that even under the 2006 FCC Rule, PDR Network’s fax was still not an advertisement because the rule requires an advertisement to have a “commercial aim,” and no such aim existed.  Id. Accordingly, it granted PDR Network’s motion to dismiss.

The Fourth Circuit disagreed, holding that the jurisdictional command of the Hobbs Act requires a district court to apply FCC interpretations of the TCPA. See Carlton & Harris Chiropractic, 883 F.3d at 469. The district court therefore erred by engaging in Chevron analysis and “declin[ing] to defer” to the FCC rule and issuing a ruling “at odds with the plaining meaning” of the 2006 Order’s text.  Id. at 462.  Thereafter, PDR Network appealed to the Supreme Court asserting that the Fourth Circuit opinion created a circuit split with the Second, Sixth, Ninth, and Eleventh Circuits, all of which require a “commercial” nexus for faxes promoting free goods or services to be considered “advertisements” under the TCPA.

PDR Network’s petition for a writ of certiorari asks the Supreme Court to resolve the Circuit split regarding whether the Hobbs Act prevents courts from engaging in a typical Chevron analysis of FCC Orders interpreting the TCPA and requires automatic deference to the agency’s order where there has been no challenge to the validity of the order.  It also asks the Court to resolve whether the FCC’s 2006 Order creates a per se rule that faxes that “promote goods and services even at no costs” are “advertisements” under the TCPA or whether courts can require a commercial nexus to a firms’ business in order for such a fax to fall within the definition of “advertisement.”  In granting certiorari, the Supreme Court said it is limiting the certiorari to the question of whether the Hobbs Act required the lower court to accept the FCC’s legal interpretation of the TCPA.

In Wake of ACA Int’l, Ninth Circuit Adopts Expansive Definition of ATDS

By: Joseph C. Wylie II, Molly K. McGinley, Nicole C. Mueller

The U.S. Court of Appeals for the Ninth Circuit recently adopted an expansive definition of the term “automatic telephone dialing system” (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”).  In Marks v. Crunch San Diego LLC, the panel held that, in light of ACA Int’l, the U.S. Court of Appeals for the D.C. Circuit’s landmark decision interpreting certain provisions within the TCPA (previously discussed here) and based on the panel’s own review of the TCPA, the statutory definition of an ATDS includes devices that store telephone numbers to be called, whether or not the device has the ability to generate numbers randomly or sequentially.  In so holding, the Ninth Circuit splits from a number of other decisions holding that an essential element of an ATDS is the capacity to generate random or sequential numbers.

The TCPA defines 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.”  In ACA Int’l, in brief, the D.C. Circuit invalidated the Federal Communications Commission (“FCC”)’s interpretation of two key questions raised by the statutory definition of an ATDS, namely “(i) when does a device have the ‘capacity’ to perform the two enumerated functions; and (ii) what precisely are those functions?”  In so doing, the D.C. Circuit created uncertainty as to what features or attributes of a dialing system would bring it within the scope of the ATDS definition.

Plaintiff Jordan Marks filed suit against Crunch San Diego LLC (“Crunch”) after he joined the gym and received three text messages over a period of eleven months.  Crunch utilized a system called Textmunication.  In this system, phone numbers are captured and stored in one of three ways: an operator of the system can manually enter a phone number into the system; a current or potential customer may respond to a marketing campaign with a text; or a customer may provide a phone number by filling out a consent form on a Textmunication client’s website.  A client of Textmunication can then design a marketing campaign and Textmunication will automatically send the desired messages to the stored phone numbers at a time scheduled by the client.  When Crunch wants to send a text through Textmunication, a Crunch employee logs into the system, selects the recipient phone numbers, generates the content of the message, and selects the date and time for the message to be sent.  The messages are then automatically sent at the appointed time.

Prior to the decision in ACA Int’l, the district court held that Textmunication was not an ATDS because it lacked the present or potential capacity “to store or produce telephone numbers to be called, using a random or sequential number generator” and granted summary judgment for Crunch.  Marks appealed the decision, and following his appeal, ACA Int’l was decided.  The Ninth Circuit then reversed, holding that a system could be an ATDS if it has the capacity to store a list of numbers and call those numbers automatically, even if the system does not have the ability to generate random or sequential lists of numbers.  In doing so, the Ninth Circuit first reviewed the statutory definition of ATDS as set forth by Congress in 1991 and determined that the provision is ambiguous, and, accordingly, that it was appropriate to look to the context and structure of the statutory scheme.  The Ninth Circuit found that Congress intended to regulate devices that make automatic calls, including those devices that make automatic calls from lists of recipients, rather than utilizing a random or sequential number generator.  The Ninth Circuit rejected Crunch’s argument that because the system was not fully automatic, it did not qualify as an ATDS, holding that Congress had been clear that it was targeting equipment that could engage in automatic dialing rather than equipment that operated without any human oversight or contact.  The Ninth Circuit remanded the matter back to the district court for further proceedings.

In addition to the Ninth Circuit, several other courts have discussed the effect of ACA Int’l on the definition of ATDS:

  • In Gonzalez v. Ocwen Loan Servicing, LLC, the Court concluded that a predictive dialer that lacks the capacity to generate random or sequential telephone numbers and dial them, but it does include a predictive dialer that has the “present ability” to do so.
  • In Washington v. Six Continents Hotels, Inc., the Court agreed that ACA Int’l set aside not only the FCC’s 2015 ruling but also the FCC’s historic treatment of which devices qualify as an ATDS. 16-3719, 2018 WL 4092024, at *3 (C.D. Cal. Aug. 24, 2018)  The Court then determined that the complaint adequately alleged the use of an ATDS by claiming that the defendant “acquired Plaintiff’s number, stored it in a database connected to its telephonic or computer system . . . [the system] . . . has the capacity to generate random numbers . . . has the capacity to generate sequential numbers . . . [and] has the capacity to store and dial the random or sequential numbers it generates just like it stored and dialed Plaintiff’s number.”  Id.

  • In Heard v. Nationstar Mortg. LLC, the Court held that a system that could and did store customer information for at least 24 hours and did not have the capacity to store or produce telephone numbers to be called using a random or sequential number generator fell within the definition of ATDS. 16-694, 2018 WL 4028116, at *5-6 & n.2 (N.D. Ala. Aug. 23, 2018).
  • In King v. Time Warner Cable Inc., the Second Circuit determined that qualification as an ATDS was limited to those devices that were “capable at the time of use” of performing the functions of an autodialer, absent any modifications to the device’s hardware or software. 849 F.3d 473, 476–77 (2d Cir. 2018).
  • In Dominguez ex rel Himself v. Yahoo, Inc., the Court held that, absent any evidence that the device had the capacity to generate random or sequential telephone numbers and dial those numbers, the plaintiff failed to show that the text messaging system was an ATDS in light of ACA Int’l. 894 F.3d 116, 119 (3d Cir. 2018).

Given the split among courts on how to interpret ATDS, uncertainty will continue to prevail until there is additional clarification, either from the Supreme Court or the FCC.  The FCC has requested further comment from the public regarding the interpretation of the TCPA in light of this decision.

FCC Seeks Comment on TCPA Following D.C. Circuit’s Decision in ACA International

By Joseph Wylie, Molly McGinley, Andrew Glass, Greg Blase, Pamela Garvie, Amy Carnevale, and Nicole Mueller

The Consumer and Governmental Affairs Bureau of the Federal Communications Commission (the “FCC”) recently issued a public notice seeking comment on issues related to interpretation and implementation of the Telephone Consumer Protection Act (the “TCPA”).  The notice followed the recent decision of the United States Court of Appeals for the District of Columbia in ACA International v. FCC, in which the Circuit Court affirmed and vacated in part a rule previously issued by the FCC.  Our prior coverage of ACA International can be found here.

First, the FCC seeks comment on the TCPA definition of “automatic telephone dialing system.”  The TCPA defines an automatic telephone dialing system 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.”  The FCC had previously interpreted the term “capacity” to include a device “even if, for example, it requires the addition of software to actually perform the functions described in the definition.” The ACA International Court set that definition aside—finding that the agency’s “capacious understanding of a device’s ‘capacity’ lies considerably beyond the agency’s zone of delegated authority” and that it would have “the apparent effect of embracing any and all smartphones.”  The FCC seeks comment on how to interpret “capacity” in light of the guidance provided in ACA International, specifically seeking comment on how to more narrowly interpret the word “capacity” to better comport with congressional findings and the intended reach of the statute.

The FCC further seeks comment on the functions a device must be able to perform to qualify as an automatic telephone dialing system.  The FCC seeks comment on whether equipment can be considered an automatic telephone dialing system if the equipment cannot itself dial random or sequential numbers.  And the FCC seeks comment on whether the prohibition on making certain calls using an automatic telephone dialing system should apply to equipment that has the ability to use such technology but does not actually use it in making the call.

Second, the FCC seeks comment on how to treat calls to reassigned wireless numbers under the TCPA where the statute carves out calls “made with the prior express consent of the called party” from its prohibitions.  The FCC seeks comment specifically on the definition of “called party:” does it refer to the person the caller expected to reach (or reasonably expected to reach) or the person that the caller actually reached, i.e., the wireless number’s present-day subscriber?  Further, does it include the “customary user” (e.g., the close relative on a subscriber’s family calling plan)?

Third, the FCC seeks comment on how a called party may revoke prior express consent to receive robocalls.  The ACA International Court found that (1) “a party may revoke her consent through any reasonable means clearly expressing a desire to receive no further messages from the caller,” and (2) such a standard means “callers . . . have no need to train every retail employee on the finer points of revocation” and have “every incentive to avoid TCPA liability by making available clearly-defined and easy-to-use opt-out methods.”  The FCC now seeks input on what, if any, opt-out methods exist that would be sufficiently clearly defined and easy to use such that “any effort to sidestep the available methods in favor of idiosyncratic or imaginative revocation requests might well be seen as unreasonable” for unwanted calls (i.e., saying “stop calling” in response to a live caller, offering opt-out through a website, or responding with “stop” to unwanted texts; and whether callers must offer all or some combination of such methods to qualify).

Fourth, the FCC seeks renewed comment on two pending petitions for reconsideration of the FCC’s Broadnet Declaratory Ruling, in which the FCC determined that the TCPA does not apply to calls made by or on behalf of the federal government in the conduct of official government business, except when a call made by a contractor does not comply with the government’s instructions.  The petitions seek reconsideration of the FCC’s interpretation of “persons” under the TCPA, and clarification of whether federal government contractors, regardless of their status as common-law agents, are “persons” under the TCPA.  The FCC now seeks comment on whether contractors acting on behalf of federal, state, and local governments are “persons” for purposes of the TCPA.

Fifth, the FCC seeks renewed comment on the pending petition for reconsideration of its 2016 Federal Debt Collection Rules, which seeks reconsideration of several aspects of the rules, including the applicability of the TCPA limits on calls to reassigned wireless numbers.  Referring to the holding in ACA International, the FCC seeks renewed comment on “this and other issues” raised by the petition.

Comments are due by June 13, 2018 and reply comments are due by June 28, 2018.

This public notice, along with recent congressional hearings considering legislation applicable to telephone calls (previously discussed here), demonstrates that in the wake of ACA International, the laws and regulations applicable to outbound calling will continue to evolve.

 

Congress Holds Hearings on Abusive Robocalls and Caller ID Spoofing – Possible Legislative or Regulatory Changes Requires Close Watch

By Pamela Garvie and Amy Carnevale

The Senate Commerce Committee and House Energy and Commerce Committee held back-to-back hearings late last month on abusive robocalls and caller ID spoofing and how to combat them. Committee members and witnesses both highlighted the fact that robocalls and ID spoofing have “exploded in recent years” and several noted that “over 3 billion calls were placed [in March] alone” and “about a quarter of these calls are scam calls.”  Further, because the technology used to place robocalls and to spoof are evolving technically, the number of calls continues to grow.  There was broad agreement on both committees that consumer education, aggressive Federal Communications Commission (“FCC”) and Federal Trade Commission (“FTC”) enforcement actions, and the use of new ID verification and robocall-blocking technologies are important tools in combating these calls.  However, Republicans and Democrats and business and consumer witnesses are generally split on the question of whether legitimate businesses are part of the problem and whether the Telephone Consumer Protection Act (“TCPA”) needs to be reformed or conversely expanded through new legislation and regulations.  This focus on abusive/illegal robocalls and split on the TCPA presents both risks and potential opportunities for businesses and, consequently, requires close watch.

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Trade Groups Petition the FCC to Adopt a Narrow Interpretation of Autodialer Under the TCPA

By: Andrew C. Glass, Gregory N. Blase, Joseph Wylie, Molly McGinley, Pamela Garvie, Amy Carnevale, Roger L. Smerage, and Hollee M. Watson

A coalition of trade groups recently petitioned the Federal Communications Commission (the “Commission”), urging it to adopt a narrow interpretation of “Automated Telephone Dialing System” (“ATDS” or, commonly, “autodialers”) under the Telephone Consumer Protection Act (“TCPA”). The petition, filed on behalf of the U.S. Chamber of Commerce and other trade associations, follows the March 2018 decision of the U.S. Court of Appeals for the D.C. Circuit that vacated several key elements of the Commission’s 2015 TCPA Order. ACA Int’l v. Fed. Comm. Comm’n, 885 F.3d 687, 692, 701 (D.C. Cir. 2018).  Among other things, the D.C. Circuit set aside the Commission’s 2015 interpretation of what constitutes an ATDS.  The court held that the Commission’s interpretation of the term ATDS was “unreasonably expansive” and “‘offer[ed] no meaningful guidance’ to affected parties in material respects on whether their equipment is subject to the statute’s autodialer restrictions.”  Because of the limited scope of the matter before it, the D.C. Circuit did not itself interpret the term ATDS, but instead provided guidance for the Commission as to how the term should be defined.

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District Court Finds No Violation of First Amendment in TCPA Suit Brought By Coalition of Bi-Partisan Political Organizations

By Andrew C. Glass, Gregory N. Blase, Christopher J. Valente, Michael R. Creta, and Elma Delic

The U.S. District Court for the Eastern District of North Carolina recently rejected a First Amendment challenge to a portion of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227(b)(1)(A)(iii). In American Association of Political Consultants, Inc., et al. v. Sessions, et al., Case No. 5:16-cv-00252-D (E.D.N.C.), a bi-partisan coalition of political groups sued the federal government.  The coalition asserted that the TCPA’s prohibition on making auto-dialed calls or texts to cell phones without the requisite consent (the “cell phone ban”) imposes a content-based restriction on speech that does not pass strict scrutiny and is unconstitutionally under-inclusive.  (The plaintiffs’ complaint was previously discussed here.) The government defended the TCPA’s constitutionality.

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Court Finds Website Owner Did Not Send Text Messages Initiated by its Users and thus Did Not Violate the TCPA

By Andrew C. Glass, Gregory N. Blase, Roger L. Smerage, and Matthew T. Houston

In a recent decision, the U.S. District Court for the Northern District of Illinois found that the host of an automobile website did not violate the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”), by providing its users a platform to send automated text messages regarding car listings.  In Serban v. CarGurus, Inc., Case No. 1:16-cv-02531 (N.D. Ill. Mar. 12, 2018), a user of the defendant’s website mistyped her telephone number when attempting to send herself a car listing.  In doing so, the user performed a multi-step process—including selecting the “Send to Phone” option, entering the telephone number, and clicking a “Send” button—to generate a text message automatically created by CarGurus based on the car selected.  As a result of the mistyped telephone number, the text message was transmitted to the plaintiff rather than the user.

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D.C. Circuit Strikes Key Elements of FCC’s 2015 Order Interpreting the TCPA, Upholds Certain Provisions

By Joseph Wylie, Andrew C. Glass, Molly K. McGinley, Gregory N. Blase, Nicole C. Mueller, and Roger L. Smerage.

On March 16, 2018, in a long-awaited decision, the U.S. Court of Appeals for the District of Columbia Circuit vacated key provisions of the 2015 Federal Communications Commission order regarding the Telephone Consumer Protection Act, 47 U.S.C. § 227, including provisions regarding the definition of an autodialer and calls to reassigned wireless numbers.  Click here for a full discussion of the decision.

District Court Dismisses TCPA Class Action for Pharmacy Reminder Calls Under “Emergency Purposes” Exception

By: Joseph C. Wylie II, Molly K. McGinley, and Lexi D. Bond

A federal district court recently dismissed a putative Telephone Consumer Protection Act (“TCPA”) class action against CVS Health Corporation (“CVS”) Lindenbaum v. CVS Health Corp., Case No. 17-CV-1863 (N.D. Ohio Jan. 22, 2018), because the reminder calls to renew prescriptions fell within the “emergency purposes” exception of the TCPA.

Plaintiff Shari Lindenbaum alleged that CVS made at least six prerecorded prescription reminder calls to her cellphone in early 2017. She claimed that she received these calls because she had a “recycled” cell phone number — a number that once was used by an individual from whom the caller obtained consent but had since been reassigned to a different individual — and that she had never provided “prior express written consent” to receive the calls.  CVS asked the court to dismiss Lindenbaum’s claims, primarily arguing that the calls fell within the TCPA exception for “emergency purposes.”

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Legislative Efforts to Curb Caller ID Spoofing Continue at Federal and State Levels

By: Andrew C. Glass, Gregory N. Blase, and Roger L. Smerage

Caller ID spoofing—the act of using commercially-available technology or services to alter the name and telephone number that appear on the called party’s caller ID display—is pervasive. It presents significant risk not only to recipients (of being duped into thinking a call is from someone it is not) but also to the person or business whose name and telephone number the spoofer appropriates.  An unknowing recipient of a spoofed call could initiate legal proceedings against a completely innocent person or business whose information has been spoofed, causing that party unwarranted reputational harm.  Although federal and state governments have attempted to legislate against illegitimate caller ID spoofing, such legislation has struggled to counteract the problem.  Recently, however, legislators at both levels of government have undertaken new efforts to curtail harassing and deceptive use of spoofing.

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