Greenspoon Marder Client Alert: FCC’s Clarifications Not So Clear After All: D.C. Circuit Sets Aside Broad TCPA Interpretations as Arbitrary and Capricious

Consumer Finance Blog Mar 16, 2018 Fort Lauderdale, FL

In July 2015, the Federal Communications Commission (“FCC”) released a 138 page Declaratory Ruling and Order regarding the Telephone Consumer Protection Act (“TCPA”) that changed the entire regulatory landscape for businesses that utilize the telephone to communicate with consumers. The FCC interpreted as broadly as possible the definition of automatic telephone dialing system (“ATDS”)—something that is clearly and unambiguously otherwise defined in the TCPA itself, and created a proposed new rule with respect to telephone calls that, unbeknownst to the calling party, may be made to reassigned telephone numbers. The FCC also sought to create a standard for revocation of consent, and clarify an exemption for time-sensitive healthcare calls.

The FCC’s order was quickly challenged by multiple petitioners in the United States Court of Appeals, D.C. Circuit, in ACA International v. Federal Communications Commission et al. After nearly a year and a half of suspense, the D.C. Circuit finally published its Opinion. The D.C. Circuit set aside the portions of the July 2015 Order that (1) sought to expand the scope of equipment that falls within the definition of ATDS, and (2) sought to create a form of strict liability for telephone calls made to reassigned numbers. The portion of the July 2015 Order relating to revocation of consent was affirmed, as was the exemption for time-sensitive healthcare calls.

The Opinion sets aside the FCC’s attempt to “clarify” the definition of an ATDS and, more generally, “the types of calling equipment that fall within the TCPA’s restrictions.” The court concluded: “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.”

Although the D.C. Circuit did not go so far as to give its interpretation of the types of calling equipment that it believes would fall within the purview of the TCPA, it did comment throughout the Opinion about how the FCC went too far. The court also made clear that the phrase “using a random or sequential number generator” cannot be ignored in any attempt to define equipment that may be considered an ATDS. The D.C. Circuit noted that “[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 FCC “cannot”, as it tried to do in the July 2015 Order, “espouse both competing interpretations in the same order”.

As for telephone calls made to reassigned numbers, the court set aside the FCC’s “one-call safe harbor” approach, finding it to be “arbitrary and capricious”. According to the court, if it “were to excise the Commission’s one-call safe harbor alone, . . . that in turn would mean that a caller is strictly liable for all calls made to the reassigned number, even if she has no knowledge of the reassignment.”

Businesses should be mindful of this Opinion, but also understand that plaintiff’s and attorneys will continue to urge the courts in which they file individual lawsuits and class actions to adopt broad interpretations of the TCPA. Further, the FCC will likely have to clarify the ATDS and reassigned number issues once more. The political makeup of the FCC has changed since the 2015 Order, shifting from majority Democratic to majority Republican. Should the current FCC take up the issues, a different analysis may be expected. Until then, businesses should be aware of current regulations and consult with legal advisors to ensure compliance in this ever-evolving area of law.

About Greenspoon Marder

Greenspoon Marder LLP is a full-service law firm with over 240 attorneys and more than 20 office locations across the United States. With operations from Miami to New York and from Denver to Los Angeles, our firm attracts some of the nation’s top talent in key markets and innovation hubs. Our core practice areas include Real Estate, Litigation, and Transactional Services, complemented by the capabilities of a full-service firm. Greenspoon Marder has upheld a spot on The American Lawyer’s Am Law 200 as one of the top law firms in the U.S. since 2015, and our goal is to provide exceptional client service by developing a thorough understanding of each client’s business needs and objectives in order to provide strategic, cost-effective solutions.

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This Greenspoon Marder LLP Client Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice nor a solicitation of any type. Please contact the author(s) or your Greenspoon Marder LLP contact if you have any questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer’s legal qualifications and experience.

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Greenspoon Marder Client Alert: FCC’s Clarifications Not So Clear After All: D.C. Circuit Sets Aside Broad TCPA Interpretations as Arbitrary and Capricious

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