Category: Compliance Updates & Enforcement

1
FCC Seeks Comment on TCPA Following D.C. Circuit’s Decision in ACA International
2
Trade Groups Petition the FCC to Adopt a Narrow Interpretation of Autodialer Under the TCPA
3
Second Circuit Affirms Dismissal of Action Against Healthcare Provider but Cautions Careful Review of TCPA Exemptions
4
Federal Government Continues Defense Against First Amendment Challenge to TCPA
5
Dish Network Ordered to Pay $280 Million Fine, Damages in Federal TCPA Lawsuit
6
Rite Aid Wins Summary Judgment in TCPA Class Action for Flu Shot Reminder Calls
7
D.C. Circuit Holds that FCC Lacks Authority to Require Opt-Out Notices for Solicited Faxes, Vacates FCC Order
8
Federal Government Not Successful in Moving to Dismiss First Amendment Challenge to TCPA
9
Second Circuit Affirms Denial of Class Certification in TCPA Case on Ascertainability Grounds Due to Lack of Recipient List
10
Rep. Virginia Foxx Seeks to Prohibit Political Robocalls to Numbers on Do-Not-Call Registry

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.

 

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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Second Circuit Affirms Dismissal of Action Against Healthcare Provider but Cautions Careful Review of TCPA Exemptions

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

The Court of Appeals for the Second Circuit recently determined that a flu shot reminder text message sent by a hospital is not an “advertisement” for purposes of the level of consent required under the Telephone Consumer Protection Act, 47 U.S.C. § 227(b) (the “TCPA”).  In issuing its ruling in Latner v. Mt. Sinai, No. 17-99 (2d Cir. Jan. 3, 2018), the Second Circuit gave effect to the FCC’s “Healthcare Exception,” which holds that “a ‘health care’ message” sent by a HIPAA “covered entity” does not require prior express written consent.

Plaintiff David Latner visited a Mt. Sinai medical facility in 2003, where he signed release forms granting consent to Mt. Sinai to use his health information “for payment, treatment and hospital operations purposes.”  On September 19, 2014, Mr. Latner received a single text message sent on behalf of Mt. Sinai by a third party encouraging him to schedule an appointment to obtain a flu shot.  Mt. Sinai stated that it sent flu shot reminder texts to all active patients of the facility Mr. Latner visited the office within three years prior to the date of the texts.  Mr. Latner’s last visit fell within that timeline.  Mr. Latner filed a lawsuit, alleging that Mt. Sinai violated 47 U.S.C. § 227(b)(1)(A)(iii), which prohibits anyone from making any call (including text messages) using any automatic telephone dialing system or prerecorded voice to a cellular telephone service without prior written express consent.  The District Court for the Southern District of New York granted Mt. Sinai’s motion for judgment on the pleadings and dismissed the case on the ground that the FCC has exempted healthcare providers from being required to obtain written consent prior to making calls that deliver a healthcare message.

Though it affirmed the lower court’s ultimate decision, the Second Circuit determined that the “analysis was incomplete” because it had not determined whether Mr. Latner had provided his prior express consent to receive text messages sent on behalf of Mt. Sinai.  Considering the facts of the situation, the Second Circuit determined that the text message fell within the scope of consent that Mr. Latner had previously granted to Mt. Sinai, where the consent form included a reference to Mt. Sinai sharing his information for “treatment” purposes, and the privacy notices stated that the facility could use Mr. Latner’s information “to recommend possible treatment alternatives or health-related benefits and services.”

This opinion illustrates the care callers must employ in drafting its privacy and consent notices as they relate to patients receiving calls or messages, even where the message relates to treatment provided by a healthcare provider.

Federal Government Continues Defense Against First Amendment Challenge to TCPA

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

Earlier this month, the federal government filed briefs on cross motions for summary judgment in American Association of Political Consultants v. Lynch, Case No. 5:16-00252-D (E.D.N.C.). The case challenges the constitutionality of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”) (previously discussed here and here).  The government defended the constitutionality of the statute on several bases.

First, the government argued that the TCPA is a “valid time, place, and manner regulation” and does not distinguish between the content or nature of such calls. In doing so, the government analogized the TCPA to regulations that prevent the ringing of doorbells after certain hours and attempted to distinguish the TCPA from unconstitutional ordinances regulating signs based on the type of information conveyed.

Second, the government argued that in determining whether the TCPA is “content-neutral,” the court should disregard FCC orders providing certain “exemptions” to the TCPA. The plaintiffs contend that the exemptions illustrate how the TCPA favors some types of speech over others.  According to the government, however, (1) review of those orders is outside the court’s jurisdiction in analyzing the constitutionality of the TCPA, and (2) the “exemptions” are not actually exemptions and thus do not favor a particular type of speech.  The government further asserted that to the extent any “exemption” is actually an exemption, such as the government-debt exemption passed in 2016, it is severable from the remainder of the TCPA.

Finally, the government argued that even if the TCPA regulates the content of speech, it withstands strict scrutiny because the “protection of residential privacy” is a compelling governmental interest, and the TCPA is related to that interest where it acts to protect against the invasion of residential privacy. The government also posited that the TCPA is narrowly tailored because it is limited to a small subset of speech, rather than all potential methods of communication, and that the statute is least restrictive option to accomplish that goal.

Although it is difficult to predict how the court may rule on the parties’ cross motions, the government’s arguments provide insight regarding the bases on which the court is likely to evaluate the constitutionality of the TCPA.

Dish Network Ordered to Pay $280 Million Fine, Damages in Federal TCPA Lawsuit

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

In a 475-page opinion issued earlier this week, the United States District Court for the Central District of Illinois ordered Dish Network Corp., to pay $280 million to the United States government and four states, marking what the government says is a record fine for telemarketing violations, including violations of the Telephone Consumer Protection Act (“TCPA”), the Telemarketing Sales Rule and the laws of California, Illinois, North Carolina, and Ohio, through what the Court called “millions and millions” of calls.

In March 2009, the states and the Federal Trade Commission (“FTC”) sued Dish Network after the company settled with 46 states for purported violations of “do not call” rules and rules governing robocalling. The Court found that Dish Network and its contractors made millions of illegal calls by calling numbers listed on the national Do Not Call Registry and by placing telemarketing calls that deliver prerecorded messages to live consumers, in violation of the TCPA and the states’ laws governing telemarketing.

Plaintiffs sought damages in the amount of $2.1 billion, but the Court determined that the amount requested, approximately 150 percent of Dish Network’s annual profits, “could materially affect Dish’s ability to continue operations.” Although the Court declined to interpret the TCPA as allowing an award “up to” $500 per violation rather than $500 per violation, as Dish Network requested, the Court exercised its discretion in awarding an amount less than $500 per violation.  An award of $500 per violation would have incurred a penalty of $8.1 billion; instead, the Court awarded $280 million, or twenty percent of Dish Network’s 2016 profits, an amount it determined to be “proportionate and reasonable” and “a miniscule fraction of maximum possible penalties and damages.”  The Court determined the reduced award to be appropriate given that Dish Network “made some efforts to avoid violations in its direct marketing and took some actions” to monitor third-party contractors while substantial enough to reflect “[t]he injury to consumers, the disregard for the law, and the steadfast refusal to accept responsibility.”

The Court further prohibited the company from violating do-not-call laws moving forward and imposed a 20-year plan for supervision of Dish Network’s telemarketing.

This is the second judgment against Dish Network issued in 2017 for violations of the TCPA (the prior judgment, issued by a federal court in North Carolina, is discussed here and here).  As the cases against Dish Network demonstrate, companies may face substantial liability based on the actions of third-party contractors.

Rite Aid Wins Summary Judgment in TCPA Class Action for Flu Shot Reminder Calls

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

A New York U.S. District Court recently granted summary judgment in favor of defendant Rite Aid Headquarters Corporation in a putative Telephone Consumer Protection Act (“TCPA”) class action, holding that calls reminding customers about the flu vaccine were “health related” and therefore Rite Aid was not required to obtain prior express written consent before making the calls. Though the opinion was filed under seal on March 30, 2017, it was made public last week. Read More

D.C. Circuit Holds that FCC Lacks Authority to Require Opt-Out Notices for Solicited Faxes, Vacates FCC Order

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

The U.S. Court of Appeals for the District of Columbia Circuit, in a 2-1 split decision, has issued an opinion that the Federal Communications Commission (the “FCC”) lacked authority under the Telephone Consumer Protection Act (“TCPA”) to regulate facsimiles that were sent with the recipient’s consent. [1]  This opinion found that an FCC rule issued in 2006 (the “2006 Order”) requiring a sender to include an opt-out notice on faxes that were solicited by the recipient was unlawful and vacated the FCC order implementing the rule. [2]

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Federal Government Not Successful in Moving to Dismiss First Amendment Challenge to TCPA

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

A North Carolina federal district court recently denied a motion by the federal government to dismiss claims raising a First Amendment challenge to a portion of the Telephone Consumer Protection Act (“TCPA”). See American Ass’n of Political Consultants v. Lynch, Case No. 5:16-00252-D (E.D.N.C.). At this early stage of the case, the government did not address the substance of the constitutional challenge.  Rather, the government asserted that the court did not have jurisdiction over the case and that the political organizations which filed the suit did not have standing to maintain suit.  The court, however, rejected the government’s arguments and allowed the case to proceed.

Background

Last year, a bi-partisan coalition of political groups filed a two-count complaint alleging that aspects of the TCPA run afoul of First Amendment free-speech protections. Specifically, the suit contends that the TCPA’s prohibition on making auto-dialed calls or texts to cell phones without the requisite consent, 47 U.S.C. § 227(b)(1)(A)(iii), imposes a content-based restriction on speech that fails to pass strict scrutiny and is unconstitutionally underinclusive.  The federal government moved to dismiss on standing and subject-matter jurisdiction grounds. In response, the plaintiffs amended their complaint to add the Federal Communications Commission (“FCC”) as a defendant and to address purported deficiencies in the original complaint.

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Second Circuit Affirms Denial of Class Certification in TCPA Case on Ascertainability Grounds Due to Lack of Recipient List

By Joseph Wylie, Molly McGinley, Nicole Mueller

In a non-precedential opinion issued earlier this week, the Second Circuit held in Leyse v. Lifetime Entertainment Services, LLC, that a class could not be certified in a Telephone Consumer Protection Act case because the plaintiff did not have a list of the recipients of telemarketing phone calls.  The Second Circuit followed its own precedent identifying ascertainability as an “implied requirement” under Rule 23.  In so ruling, the Second Circuit has further demonstrated the different approaches to ascertainability that federal circuit court apply (previously discussed here).

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Rep. Virginia Foxx Seeks to Prohibit Political Robocalls to Numbers on Do-Not-Call Registry

By Pamela J. Garvie, Andrew C. Glass, Joseph C. Wylie II, Gregory N. Blase, and Molly K. McGinley

Rep. Virginia Foxx (R-NC) has introduced a bill, H.R. 740 (the “Robo Calls Off Phones Act” or “Robo COP Act”), to “stop the intrusion of political robocalls in homes across America.” Rep. Foxx stated that “politicians made sure to exempt political robo-calls from the power of the ‘Do Not Call’ registry. If these calls weren’t such a nuisance, their blatant exclusion would be laughable.” Claiming that eligible voters receive more than 20 political prerecorded voice calls per day, Rep. Foxx seeks through the bill to end the “robocall loophole” for politicians.

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