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The D.C. Circuit Reins in the FCC on Robocalls and Texts

On Friday, March 16, 2018, the U.S. Court of Appeals for the D.C. Circuit issued its ruling in ACA International v. FCC, which set aside two major components of a 2015 Federal Communications Commission (“FCC” or “Commission”) Declaratory Ruling and Order (“Order”) intended to clarify the Commission’s position on the Telephone Consumer Protection Act (“TCPA”).  This 1991 statute was enacted to combat the “proliferation of intrusive, nuisance calls … from telemarketers.”  The TCPA outlaws all calls or texts using an “automatic telephone dialing system” (“ATDS” or “autodialer”) unless made for emergency purposes, for the collection of a government debt, or with prior express consent. 

The court addressed several key issues, including (1) what types of equipment qualify as an ATDS, and (2) a caller’s liability for calls or texts to a reassigned number where a previous subscriber provided prior consent.

What is an autodialer?

The TCPA applies to all calls and texts made using an ATDS, which is defined as “equipment which has the capacity to (A) store or produce telephone numbers to be called… and to (B) dial such numbers.”  However, the court determined the FCC erred in applying that definition in an overly broad way and by not providing clarity for companies trying to determine if their equipment fit within the statutory definition.

The FCC had construed “capacity” to mean not only a device’s current capabilities but also its potential functionality, even if that functionality would require software or similar modifications.  In the Commission’s view, the relevant test was not whether autodialer features were actually used, but whether the device had the capability to utilize them.

That distinction is critical.  As the court observed, through a simple and widely available app, any smartphone could acquire the capability to function as an autodialer, subjecting that smartphone’s owner to potentially ruinous penalties under the statute.  (The TCPA provides for $500 per violation, or $1,500 per violation if willful.)  Texting friends using the app, without their prior consent, could become a costly exercise under this construction of the statute.  In the court’s view, smartphones could not possibly fall within the scope of the statute.

The court also found unclear the FCC’s position on the precise functions necessary for a device to be considered an autodialer.  In one part of the FCC Order, the FCC indicated that autodialer devices were required to both generate random or sequential numbers and dial them, but the Order elsewhere stated that devices that only dialed the numbers also qualified.

In another part of the Order, the FCC stated the basic function of an autodialer was the ability to dial without human intervention, yet it indicated a device still might qualify as an autodialer even if it required human interaction to dial.  Additionally, the requirement that an autodialer be capable of “dialing thousands of numbers in a short period of time” did not provide clarity on what qualifies as a “short period.”

The combination of overbreadth and substantial uncertainty led the court to set aside the Commission’s definition.

Are callers liable for calls or texts to reassigned numbers?

Millions of numbers are reassigned every year.  Even though the waiting period for issuing a recycled number can range from 90 days to a year, cellular carriers can re-assign numbers at a faster pace.  The FCC faced this landscape in 2015 when it established the one call or text “safe harbor” for calls or texts to a reassigned number for which the previous subscriber gave prior express consent.  The Commission stated that after that one post-reassignment call or text, a caller could be held liable for continuing to call or text without the new subscriber’s consent.

The court first affirmed the Commission’s view that it is the actual party called, not the intended called party, who is relevant to the question of consent.  In other words, a caller is responsible for obtaining the consent of the current subscriber; reliance on consent by a prior subscriber, even if that is who the caller believes it is contacting, does not suffice.

However, the court also determined that a “one call or text” safe harbor was arbitrary and without basis.  There is nothing about a single text, for example, that would alert a caller to the fact that a number had been reassigned, unless the recipient of the text responded so to advise.  The Commission itself acknowledged that “even the most careful caller, after employing all reasonably available tools” may not learn of the reassignment.

Rather than simply set aside the safe harbor, the court invalidated the entirety of the FCC’s provisions addressing reassigned numbers.  The court noted that to set aside only the safe harbor would open the door to a strict liability regime for all calls to reassigned numbers, an outcome the Commission sought to avoid.  As a result, the court directed the Commission to re-evaluate its approach to reassignments altogether.

The FCC Did Not Lose Out Completely

Although the court reversed the most consequential, challenged aspects of the Order, the decision was not a clean sweep for the challengers.  The court affirmed the FCC’s position rejecting the ability of companies to prescribe how consent may be revoked, instead allowing revocation through any reasonable means.  The court also endorsed the FCC’s limitation of the healthcare exemption from the consent requirement solely to communications with a healthcare treatment purpose.

More to Come

The court’s ruling on the ATDS and reassignment issues was welcome news to companies facing significant potential exposure under the TCPA.

The ball is now squarely back in the FCC’s court to re-address the scope of the definition of ATDS (so long as it would not capture smartphones) and to decide again how it wishes to address reassignment. In the meantime, lawsuits will continue, and it will be interesting to see how courts address these issues in the absence of valid agency guidance.