Posted by Rick Feller on Mon, 03/26/2018 - 18:00
On Friday, March 16, 2018, the D.C. Circuit at last issued its long awaited decision on the challenge to the Federal Communication Commissions (FCC) 2015 Omnibus Declaratory Ruling and Order. The court’s decision addressed claims that the FCC exceeded its authority in defining key elements of the Telephone Consumer Protection Act (TCPA).
It may have taken three years, but the court’s decision brought some closure to the FCC’s expansive approach to the TCPA which included defining an Automatic Telephone Dialing System (ATDS) as a device with the “capacity” to store, generate, and dial numbers. The ruling also vacated the FCC’s “one free call” safe harbor that applied to telephone numbers that had been reassigned to another person without the calling party’s knowledge. (Replay our recent one-hour webinar Breakdown: D. C. Circuit's Opinion on the FCC's 2015 TCPA Ruling.)
The court, in a disappointing move, upheld a call recipient’s right to revoke previously granted consent by any reasonable means. They also upheld the scope of the FCC’s exemptions from TCPA liability pertaining to calls and text messages regarding urgent healthcare.
What does the ruling mean to the management of your telemarketing campaigns? Here is a summary of the key decisions from the long awaited ruling by the Court of Appeals.
Key Rulings On The 2015 TCPA Omnibus Order
2015 Omnibus Declaratory Ruling and Order: For purposes of being covered under the TCPA, the FCC defined an ATDS as a device with the “potential” capacity to store and dial telephone numbers using a random number generator.
2018 Court of Appeals Ruling: The court found the FCC’s interpretation of the term “capacity” in the statutory definition of an ATDS to be “utterly unreasonable in the breadth of its regulatory inclusion”. Therefore, the Court of Appeals vacated this FCC rule.
“…nearly every American is a TCPA-violator-in-waiting…”
In determining their ruling, the Court of Appeals focused on the FCC’s acknowledgement that the definition of “capacity” could include smartphones because they use software that allows them the capacity to store telephone numbers and dial them. The court took that admission to the logical conclusion that “nearly every American is a TCPA-violator-in-waiting, if not a violator-in-fact because every uninvited communication from a smartphone infringes federal law.”
The Court of Appeals concluded that the FCC’s order lacked clarity about which functions qualify a device as an autodialer and “offered no meaningful guidance to affected parties” to assist the calling party with identifying what is allowed and what is prohibited. The lack of clarity compounded the unreasonableness regarding the FCC’s arbitrarily expansive interpretation of a device’s “capacity”.
2015 Omnibus Declaratory Ruling and Order: The TCPA prohibits certain telephone calls made without the “called party’s” consent. The FCC recognized that telephone numbers are often reassigned to other consumers without the calling party’s knowledge. To address this issue, the FCC created a “safe harbor” for the first call/text to the reassigned number, regardless of whether the call was answered or lead to actual knowledge of the reassignment.
2018 Court of Appeals Ruling: The TCPA specifically permits ATDS calls “made with the prior express consent of the called party.” The court found the one-free-call safe harbor to be arbitrary and capricious since it served no purpose for ensuring that the calling party would learn of the phone number reassignment. Therefore, the Court of Appeals vacated this FCC rule.
In determining their ruling, the court noted that the FCC had concluded that the term “called party” in the statute referred not to the intended recipient of a call but to the current subscriber. For the caller that meant that even if a retailer had received express consent to call a customer’s cellphone number they still ran the risk of a TCPA violation. Such a violation would occur if the customer had closed their wireless account and their phone number in turn had been reassigned to another consumer. If the retailer had no knowledge of the reassignment they were at risk of TCPA liability.
The Court of Appeals concluded that “no cognizable conception of reasonable reliance” supports the commission’s blanket, one-call-only allowance. The FCC conceded that it was not possible for the caller to necessarily know if a number had been reassigned after only one call, especially if the consumer was silent on the current status of the telephone number. The court also criticized the absence of any time limit on the one-call safe harbor.
The court also pointed out that the FCC is in the midst of designing a process specific to reassigned phone numbers that would allow businesses to avoid the problems connected with its one-call safe harbor rule. (Read blog article: FCC Issues Second Further Notice of Proposed Rulemaking on Reassigned Numbers.)
“I am heartened by the court’s unanimous decision, which seems to reaffirm the wording of the statute and rule of law. This will not lead to more illegal robocalls but instead remove unnecessary and inappropriate liability concerns for legitimate companies trying to reach their customers who want to be called. In effect, it rejects the former Commission’s misguided interpretation of the law, inappropriate expansion of scope, and irrational view of reassigned numbers.” – FCC Commissioner Mike O’Rielly
2015 Omnibus Declaratory Ruling and Order: Consent can be revoked in any “reasonable manner”, written or oral, that clearly expresses the consumer’s desire and that is reasonably expected to communicate that desire to the party to whom consent had previously been given.
2018 Court of Appeals Ruling: The court affirmed the FCC on the issue of consent revocation meaning that the Omnibus Order on this issue remains unchanged.
In determining their ruling, the court signaled its approval for the simple and easy methods for revoking consent and to the possibility of having the process for consent handled contractually through the inclusion of language identifying the agreed upon methods of revocation. They supported the existing order’s allowance for a caller to revoke consent at any time and through any reasonable means — orally or in writing — that clearly expresses a desire not to receive further messages. For that reason, the court affirmed the FCC’s “reasonable means” standard for revoking consent to receive further messages.
2015 Omnibus Declaratory Ruling and Order: The FCC allowed exemptions from TCPA regulations for certain types of healthcare messages. Expressly excluded from those exemptions were calls that include "telemarketing, solicitation, or advertising content, or which include accounting, billing, debt-collection, or other financial content.”
2018 Court of Appeals Ruling: The court decided to uphold the scope of the narrower exemption for healthcare related calls to wireless numbers and leave unchanged this provision of the Omnibus Order.
In determining their ruling, the court rejected concerns about the scope of the exemptions. Petitioners had argued that the exemption’s inclusions and exclusions were arbitrary and conflict with HIPAA. The court noted in its rejection that there is “no obstacle to complying with both the TCPA and HIPAA” because “the two statutes provide separate protections.”
Also rejected was the argument that a narrower exemption for healthcare calls made to wireless numbers was “inherently contradictory” because the TCPA treats wireless numbers differently than residential numbers and that “the statute itself contemplates that calls to wireless numbers tread [more] heavily upon ... consumer privacy interests.” For those reasons, the court upheld the FCC’s healthcare exemption.
“Today’s unanimous D.C. Circuit decision addresses yet another example of the prior FCC’s disregard for the law and regulatory overreach. As the court explains, the agency’s 2015 ruling placed every American consumer with a smartphone at substantial risk of violating federal law. That’s why I dissented from the FCC’s misguided decision and am pleased that the D.C. Circuit too has rejected it.” – FCC Chairman Ajit Pai
Despite the recent D.C. Circuit ruling, TCPA litigators are not going away anytime soon. Staged leads initiated by litigator groups seeking a quick payout for TCPA claims combined with an increased risk of contacting reassigned numbers remains a troublesome unsolved issue and potential risk for many enterprises.