After keeping us waiting for nearly a year and a half after oral argument in October 2016, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit last week weighed in on the Federal Communications Commission’s (FCC) 2015 Omnibus Telephone Consumer Protection Act (TCPA) Order, which we previously summarized. The court was asked to opine on four aspects of the 2015 Order, including its expanded definition of “automatic telephone dialing system” (more commonly referred to as an “autodialer” or ATDS), restrictions on calling reassigned numbers, and whether and when previously provided consent may be revoked. Although we happily welcome the ruling, we did not get all the answers that industry was likely hoping for.
In the 51-page ruling, the court first set aside the FCC’s efforts to “clarify” the definition of “autodialer” and explicitly rejected its expanded definition of “capacity,” holding that “the Commission’s interpretation of the term ‘capacity’ in the statutory definition of an ATDS is ‘utterly unreasonable in the breadth of its regulatory [in]clusion.'” However, the court did not agree that the label “present ability” or use of a calling platform should be the determining factor either:
After all, even under the ostensibly narrower, “present ability” interpretation advanced by petitioners, a device that “presently” (and generally) operates as a traditional telephone would still be considered [to] have the “capacity” to function as an ATDS if it could assume the requisite features merely upon touching a button on the equipment to switch it into autodialer mode. Virtually any understanding of “capacity” thus contemplates some future functioning state, along with some modifying act to bring that state about. Consequently, the question whether equipment has the “capacity” to perform the functions of an ATDS ultimately turns less on labels such as “present” and “potential” and more on considerations such as how much is required to enable the device to function as an autodialer: does it require the simple flipping of a switch, or does it require essentially a top-to-bottom reconstruction of the equipment? And depending on the answer, what kinds (and how broad a swath) of telephone equipment might then be deemed to qualify as an ATDS subject to the general bar against making any calls without prior express consent?
Rhetorical questions aside, the court also suggested that the statutory phrase “make any call,” with respect to the ATDS definition, could mean, as Commissioner Reilly’s dissent to the 2015 Order stated, “‘the equipment must, in fact, be used as an autodialer to make the calls’ before a TCPA violation can be found.” Nonetheless, that issue was not before the court, and, thus, it did not reach it; the court noted, however, that the FCC could choose to revisit the issue in a future rulemaking or declaratory order.
Finally, the court noted that the 2015 Order gave contradictory rulings regarding whether an ATDS itself must have the ability to generate random or sequential numbers to be dialed, or whether it is enough that a platform can call from a database of telephone numbers generated elsewhere, such as by loading a list of numbers to be called. However, the court foreshadowed that “[i]t follows that the [2015 Order’s] reference to ‘dialing random or sequential numbers’ means generating those numbers and then dialing them. . . . [T]he Commission suggested it saw a difference between calling from a list of numbers, on one hand, and ‘creating and dialing’ a random or arbitrary list of numbers, on the other hand.” Ultimately, the court did not conclude that one interpretation is more correct than the other. Rather, it left the issue open, even though “affected parties are left in a significant fog of uncertainty about how to determine if a device is an ATDS,” but used the example as further evidence of why the 2015 Order is arbitrary and capricious.
As with the ATDS portion of the 2015 Order, the court set aside the portion that dealt with reassigned numbers and the “one free call” safe harbor. Notably, the court rejected the petitioners’ contention that the statutory reference to the consent of the “called party” refers to the intended or expected recipient of the call or text, rather than the actual recipient – “the Commission was not compelled to interpret ‘called party’ . . . to mean the ‘intended recipient’ rather than the current subscriber” of the number. Yet, the court was sympathetic to the fact that callers may not have any means to identify whether a telephone number has been reassigned and, therefore, that the subscriber is not the one who previously provided his or her consent. The key determination is whether the caller is “reasonable” in relying on the consent it has.
Because the FCC’s one free call rule was held to be arbitrary and capricious, and was required to be set aside, so too was the agency’s treatment of reassigned numbers generally. The court expressed its doubt that the Commission intends for the TCPA to be a strict liability statute as it relates to calling reassigned numbers. Nonetheless, the court noted that, as a practical matter, the FCC already is on its way to “designing a regime to avoid the problems of the 2015 ruling’s one-call safe harbor” by way of creating a national database of reassigned numbers. If that database, in fact, is established, the existence of a number within that database would bear on the question of the caller’s “reasonableness” in identifying whether the number has been reassigned or is still tied to the consumer who provided consent.
Next, the court upheld that portion of the 2015 Order which concluded that consumers may revoke their consent at any time through any reasonable means, as long as the revocation “clearly expresses a desire not to receive further messages.” What is notable, however, is what the court said about the difference between consent given as part of bargained-for consideration underlying a contract versus consent provided in a non-contractual manner, such as via an online lead form:
Finally, petitioners object to the Declaratory Ruling insofar as it might preclude callers and consumers from contractually agreeing to revocation mechanisms. The Commission correctly concedes, however, that the ruling “did not address whether contracting parties can select a particular revocation procedure by mutual agreement.” The ruling precludes unilateral imposition of revocation rules by callers; it does not address revocation rules mutually adopted by contracting parties. Nothing in the Commission’s order thus should be understood to speak to parties’ ability to agree upon revocation procedures.
Whether consent given as part of a contract may be revoked has been a hot issue since the Second Circuit held last summer in Reyes v. Lincoln Automotive Financial Services that it may not.
Finally, the panel also upheld the FCC’s exemption from the TCPA for healthcare-related calls.
Considering his dissent when the Order was issued in 2015, we don’t find it surprising that FCC Chairman Pai applauded the decision, explaining that “the decision addresses yet another example of the prior FCC’s disregard for the law and regulatory overreach.” It will be interesting to see how the dominoes fall after this ruling, and, as always, we will be paying close attention.